Is quicker way to pay termination distributions in a quarterly-valuate

[Guest FREE401k]

In a quarterly-valuated 401(k) Plans, Plan participants who leave the employment of the Plan Sponsor can take a distribution in the quarter after they leave. As recordkeeper, when the quarter is over, we do the valuation, mail out the statements, then mail termination packages to all participants who left during the quarter, receive the forms back from the participants, then have the trustee issue the check. This process means that participants usually get their checks in the middle of the quarter after they left. So an employee who terminates April 15th, for example, would probably get his check around August 15th. Does anyone have a good way to speed this process up?

While we hate to focus so much time on an issue that is not material to most participants' retirement benefit, we have several Plan Sponsors who have high turnover and are on quarterly Plans. We spend a great deal of time fielding phone calls from terminated employees who want their money NOW. Going to daily valuation is not an option in this situation, for many of the reasons in the daily vs. quarterly debate that are outside the scope of this question.

[bzorc]

From an administrative standpoint, giving terminated participants their paperwork when they're walking out the door could speed things along a little, since they will return it faster.

As far as paying terminees, short of turning the valuation over on a much quicker pace, you don't have much recourse except for going to a 2 payment approach. If, in your example, you have an April 15 terminee, you could possibly pay that person 80% of their March 31 balance, and then pay the remainder once your valuation is completed. Now you're getting into having to issue two checks, which is a pain. Short of that, you are doing things the way you are supposed to, in my opinion. Such is life in the retirement world, where everybody now is aware of market fluctuations and wants their money "yesterday".

Good luck.