I have a Profit Sharing Plan with a pooled account that has an annual valuation.
Termination Distributions are to be paid after end of plan year in which participant terminates.
I have received a distribution form from a participant that terminated in 2007, do we need to pay out the participant based on 12/31/07 balance or can we force participant to wait till 12/31/08 annual valuation is complete?
The trustee of the plan is concerned that other participants would take the loss of this one participant if we pay out on 12/31/07 balance.
Full Version: Distributions for Annual valuated plan
If you don't have a smart plan document, and indications are that you do not, this could get complicated and you need someone to help who knows what they are doing.
QUOTE (NPS Darren @ Dec 11 2008, 01:36 PM) 
I have a Profit Sharing Plan with a pooled account that has an annual valuation.
Termination Distributions are to be paid after end of plan year in which participant terminates.
I have received a distribution form from a participant that terminated in 2007, do we need to pay out the participant based on 12/31/07 balance or can we force participant to wait till 12/31/08 annual valuation is complete?
The trustee of the plan is concerned that other participants would take the loss of this one participant if we pay out on 12/31/07 balance.
Termination Distributions are to be paid after end of plan year in which participant terminates.
I have received a distribution form from a participant that terminated in 2007, do we need to pay out the participant based on 12/31/07 balance or can we force participant to wait till 12/31/08 annual valuation is complete?
The trustee of the plan is concerned that other participants would take the loss of this one participant if we pay out on 12/31/07 balance.
Does your plan allow the plan administrator to declare interim valuation dates?
QUOTE (J Simmons @ Dec 11 2008, 04:02 PM)
QUOTE (NPS Darren @ Dec 11 2008, 01:36 PM)
I have a Profit Sharing Plan with a pooled account that has an annual valuation.
Termination Distributions are to be paid after end of plan year in which participant terminates.
I have received a distribution form from a participant that terminated in 2007, do we need to pay out the participant based on 12/31/07 balance or can we force participant to wait till 12/31/08 annual valuation is complete?
The trustee of the plan is concerned that other participants would take the loss of this one participant if we pay out on 12/31/07 balance.
Termination Distributions are to be paid after end of plan year in which participant terminates.
I have received a distribution form from a participant that terminated in 2007, do we need to pay out the participant based on 12/31/07 balance or can we force participant to wait till 12/31/08 annual valuation is complete?
The trustee of the plan is concerned that other participants would take the loss of this one participant if we pay out on 12/31/07 balance.
Does your plan allow the plan administrator to declare interim valuation dates?
We would have to amend the plna to allow for an interim valuation date.
Must we process participant distributions from Annual valuated plans based on 12/31/07 values?
My thought is that we could if we can say the trustee is exercising his/her fiduciary responibility to protecting the gain/loss in other's accounts by not processing distributions at this time based on 12/31/07 values. Would this be a valid reason for putting off participant distributions till 12/31/08 valuations are completed.
QUOTE (NPS Darren @ Dec 15 2008, 08:46 AM)
QUOTE (J Simmons @ Dec 11 2008, 04:02 PM)
QUOTE (NPS Darren @ Dec 11 2008, 01:36 PM)
I have a Profit Sharing Plan with a pooled account that has an annual valuation.
Termination Distributions are to be paid after end of plan year in which participant terminates.
I have received a distribution form from a participant that terminated in 2007, do we need to pay out the participant based on 12/31/07 balance or can we force participant to wait till 12/31/08 annual valuation is complete?
The trustee of the plan is concerned that other participants would take the loss of this one participant if we pay out on 12/31/07 balance.
Termination Distributions are to be paid after end of plan year in which participant terminates.
I have received a distribution form from a participant that terminated in 2007, do we need to pay out the participant based on 12/31/07 balance or can we force participant to wait till 12/31/08 annual valuation is complete?
The trustee of the plan is concerned that other participants would take the loss of this one participant if we pay out on 12/31/07 balance.
Does your plan allow the plan administrator to declare interim valuation dates?
We would have to amend the plna to allow for an interim valuation date.
Must we process participant distributions from Annual valuated plans based on 12/31/07 values?
My thought is that we could if we can say the trustee is exercising his/her fiduciary responibility to protecting the gain/loss in other's accounts by not processing distributions at this time based on 12/31/07 values. Would this be a valid reason for putting off participant distributions till 12/31/08 valuations are completed.
Does the Plan state that a distribution takes place after the year of termination, or as soon as administratively feasible following the year of termination? Perhaps it states that the distribution takes place in the plan year following the plan year of termination?
I would think that the operational aspect of the Plan would trump the "trustee's discretion".
QUOTE (NPS Darren @ Dec 15 2008, 10:46 AM)
We would have to amend the plna to allow for an interim valuation date.
Must we process participant distributions from Annual valuated plans based on 12/31/07 values?
My thought is that we could if we can say the trustee is exercising his/her fiduciary responibility to protecting the gain/loss in other's accounts by not processing distributions at this time based on 12/31/07 values. Would this be a valid reason for putting off participant distributions till 12/31/08 valuations are completed.
Must we process participant distributions from Annual valuated plans based on 12/31/07 values?
My thought is that we could if we can say the trustee is exercising his/her fiduciary responibility to protecting the gain/loss in other's accounts by not processing distributions at this time based on 12/31/07 values. Would this be a valid reason for putting off participant distributions till 12/31/08 valuations are completed.
So if the value goes up dramatically some year are you going to be trying to do an interim valuation to make sure that they participants share in the gains? I don't think you can do one without the other.
NPS Darren,
Does the Plan in question use a document from one of the "nationally-recognized" providers (e.g., Corbel, Datair, FT Williams, etc.)? If so, perhaps someone can point you to the appropriate provision.
SmB
Does the Plan in question use a document from one of the "nationally-recognized" providers (e.g., Corbel, Datair, FT Williams, etc.)? If so, perhaps someone can point you to the appropriate provision.
SmB
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