How should the distribution of trailing contribution(s) be handled in the event a participant requests a lump sum distribution and the distribution is made before all contributions have posted to the participant's account. Often in a daily processing arrangement a participant may be able to receive a distribution immediately after his or her termination and before all pending contributions have posted. Is it appropriate to distribute the trailing contribution in the same manner as the original distribution was distributed if the trailing distribution occurs no later than 90 days after the participant received the original election and tax notice? (I know in practice that this is often what occurs but is it appropriate?)

We set a policy addressing this situation shortly after becoming aware of the problem. It seems to go along with daily valuations, but it took awhile before we realized what was happening. Generally the amounts are small but even if they are several hundred dollars, we distribute them, as residuals, under the original distribution instructions.