How do I value a Pension Fund as of 12/31?
L1: How do I value a Pension Fund as of 12/31?In calculating my SEPP, how do you give a 12/31/08 value to pension fund roll-out that I just received. I wish to begin SEPP immediately. I received $400,000. The provider I’m using says I need to know the 12/31 value. I have no idea. Anyone?2009-07-14 18:50, By: dmorganoh, IP: [184.108.40.206]
L2: How do I value a Pension Fund as of 12/31?What do you mean by “roll-out” ? Was this a 100% distribution to you in your name, or is this for a roll-OVER to your IRA ? Did you have any NUA ( Employer Stock) in the plan ? Did they sell it, or distribute it to you in stock ?
Why was it given to you ? Did you ask for it ? Was the plan terminated ? Did the company go out of business ? Bankrupt ?
Ask him why you need to know the 12/31/08 value, or the 6/30/09 value, or any value ?
After you have all of these questions answered, meet with a tax and/or financial planner. Whatever they charge will be significantly less than the cost to you of making any mistakes.2009-07-14 19:51, By: dlzallestaxes, IP: [220.127.116.11]
L3: How do I value a Pension Fund as of 12/31?12/31 value is used in the calculations, is it not? I understand the point if I know the value, but how do you know the value of a pension plan prior to getting the money?
Money was rolled over directly to an IRA. Came from a pension plan. Not a 401k, not anything that I ever saw a number for. Just something they calculated at retirement, based on years employed, salary, etc.
But the carrier says they need to know what the value of it was on 12/31. How is it possible to know this number?2009-07-14 19:59, By: dmorganoh, IP: [18.104.22.168]
L4: How do I value a Pension Fund as of 12/31?They are clueless. As everyone on this list serve will tell you, for a SEPP you must use a RECENT valuation, usually within the last couple of months ( usually month ends of 5/31 or 6/30 in your case).
If they had cashed in everything and rolled over a check for $ 400,000, then that is the figure you could use as of that date, regardless of the value at any other date.
Look at it logically. If this had been a year ago, and the portfolio had declined 50%, what good would it have been to use a 12/31/07 value of $ 800,000 if it was only worth $ 400,000 when you haqd the funds available to start your SEPP 72-T plan.2009-07-14 20:07, By: dlzallestaxes, IP: [22.214.171.124]
L5: How do I value a Pension Fund as of 12/31?Good point, and I agree. But what they are saying is that in their calculation, they input both yesterday’s value, and the 12/31 value. Does the IRS demand that? Why would they request that if IRS doesn’t care?
Logically, I agree with you on the point of using the value of the actually check that is initially deposited as a start value.
But they are hung up on me providing a 12/31 value, as well. Can you think of any reason why they would ask for that?
Your help is appreciated. 2009-07-14 20:15, By: dmorganoh, IP: [126.96.36.199]
L6: How do I value a Pension Fund as of 12/31?There is no logical reason to request the 12/31 value – especially if it was part of a pension plan. Theplan’s actuary could calculate the value, but it would also be relatively meaningless – the valuethat is needed is the values that was transferred.
If it wereme, I would move the funds to a more cooperative company – a company that knows what a SEPP plan is and how it operates.2009-07-15 00:03, By: Gfw, IP: [188.8.131.52]
L7: How do I value a Pension Fund as of 12/31?I agree that there is no relevant use here for the pension plan balance. When starting a SEPP, the balance in a different plan can never be used for the initial balance for the SEPP even if we weren’t 7 months beyond that now.
You should use a balance in your IRA that you can document, either the date of receipt or some other daily total that you can print out now to establish. My opinion is that you are safer using a month end value that can always be reproduced as a hard copy from the IRA custodian if need be. But if the IRA did not receive the rollover until after 6/30 and you cannot wait until 7/31, then use a dated print out of the IRA on any day after all the rollover funds were deposited into the IRA account.
I further agree that if the current IRA custodian is this misinformed about SEPPs, you may not get any real support from them onANY element of your plan, and you might be better off directly transferring this IRA to another IRA custodian such as Schwab or Fidelity. But before going through that added trouble, be sure you are talking to the right people at the current firm. They may be there, but you have not located them yet.2009-07-15 00:24, By: Alan S., IP: [184.108.40.206]
L2: How do I value a Pension Fund as of 12/31?I’m quite concerned about three statements in your original post, and you could be setting yourself up for a really costly mess if my suspicions are correct. Let me elaborate.
1. “I wish to begin SEPP Immediately.” If you are in such a rush to start receiving funds then take a “penalty withdrawal” now to relieve the immediate financial burden. If you move too fast and don’t set up the SEPP correctly, then it will be very easy to bust the plan and have to pay penalties and interest that could have been avoided. Slow down.
2. “I received $400,000.” When? Did the transfer from your pension plan transfer 6-months ago or did it just occur in the last few days or weeks? Transfers from pension plans and 401(k)’s and even from other IRA’s have a nasty habit of generating “trailing interest and dividends” which automatically move into the new IRA without warning and for some time after the initial transfer. So if you start a SEPP Plan with one value and in a few weeks or months the SEPP IRA receives some “trailing” funds, then you have a busted SEPP Plan without you taking any actions. To avoid this potential problem consider transferring the necessary amount to fund your desired SEPP Plan distribution to another IRA and using that new IRA for your SEPP IRA. This way any trailing funds won’t be added to your SEPP IRA and thus bust the plan. You could use the same custodian to hold both IRA accounts.
3. “The provider I’m using …” Are you referring to the IRA Custodian or the rep / agent you are working with? Any custodian should have a good working knowledge of 72(t) but if you are referring to the rep / agent, then that may be the problem. As others have stated, in your case there is no logical reason to need the 12/31/08 value of your former company’s pension plan. You don’t have a pension plan; you now have an IRA.
Please clarify the three statements above. This will help us better analyze what’s going on in your case. Without clarification I would say you have some real problems to solve before moving forward.
Jim2009-07-15 14:59, By: Jim, IP: [220.127.116.11]