Expert: Allen - 5/5/2009

Question
I retired 1/5/09.  My employer-paid pension has still not been rolled over.  First I was told that nothing would happen until 3/31/09, the date of figuring the amount due me.  Now I'm told that the plan uses something called forward balancing and that my money will not be released until the actuary determines the amount.  The problem I have is that the amount will be locked in as of 3/31/09, but it's going on 2 months that I don't have access to these funds to invest nor will I reap any of the gains these funds are making between 3/31/09 and whenever those funds are rolled over.  With about a quarter of a million dollars in the account, I'm missing out on a lot of potential gains that will stay in the aggregate fund probably to benefit the account manager.  My question is, do I have any recourse, and if so, what, or must I just wait and fume?

Answer
I believe your plan uses what is known as balance forward accounting. This means all money is pooled into a single investment account. Periodically that account is valued. This is the valuation date and it might be once a year or once a quarter. When the account is valued, the investment earnings or losses since the last valuation are allocated to the participants based on their account balances at the time the last valuation was completed.  Distributions to former employees are based on the value of the account on the latest valuation date which in your case is 3/31/09.
Normally it takes a while to complete an accurate accounting and determine what is in each participant's account.

You are right that if the investment account increases in value and you take a distribution, you will not share in the investment gains from 3/31 to the date you receive your money. This is balanced by the fact that if the account lost value, you will not share in the investment losses.

The account manager does not benefit from any investment gains or losses that are not allocated to you. These gains or losses are allocated to the remaining participants.

When you receive a statement telling you what you are entitled to and forms to request a rollover, you do not have to complete the forms. You can always leave your money in the plan and you will continue to share in the investment gains or losses. However, there will always be a lag between the valuation date and the date you receive the papers for a distribution. This is how the plan works for you and all other participants.