Jump to content

Annual Valuation and gains


Recommended Posts

We have a QDRO for a plan that is only valued annually. In this case the QDRO is silent as to the payout date for the alternate payee except for "as soon as administratively feasible." It does require us to calculate gains/losses on the amount for the alternate payee from the determination date (last year's valuation date thank goodness) until the date of segregation (note this is not the date the alternate payee gets their money as they have the option to leave it in the plan).

So the question is... how do we calculate the interest when we don't get a financial statement until the end of the year? This plan is not invested with a custodian or in mutual funds where I can simply work with units instead of dollar amount either. We are debating between estimating the gains based on last year, vs. waiting until next year when the valuation is complete.

Link to comment
Share on other sites

If you create an interim valuation (or an estimate), isn't that a plan feature that is outside normal plan operation?

You could:

- segregate now, with no interim gain/loss, or

- reply that the DRO is not a QDRO, since it requests something not in the plan.

Any precedent?

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

Link to comment
Share on other sites

I'd have an informal conversation with the parties and suggest that the segregation occur as of 12/31, the date of the regular val. If someone is insistent upon another date during this year*, then explain that there are fees associated with a special val and they can be charged to the parties (accounts) who request or otherwise need it.

*And the only reason for that is to get paid this year, otherwise the gains and losses will pretty much collapse back to the same amount whether done twice or once.

Ed Snyder

Link to comment
Share on other sites

The plan document is silent as to what happens with other distributions mid year, so I can't invalidate the QDRO based on that. I'm thinking I need to request a quarterly statement from the client that they received from the financial institution to find out the rate of return for the year, and if I can't get it, to do what Bird suggests. Thanks so much Bird and David!

Link to comment
Share on other sites

The plan doc is silent, so the Plan Administrator has discretion about mid year distributions.

If the plan has made mid year distributions to participants or alternate payees before, then the procedure is in place for handling gains and losses for such a distribution. Use that procedure to determine the gains and losses applicable to the QDRO segregation.

If the plan hasn't made mid year distributions before, then the DRO parties cannot require the plan to come up with something for this DRO, and the parties wait until the next val date. Like d.rigby and Bird said.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...