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How Defined Contribution Plans are Valued

The value of a benefit under a Defined Contribution Plan on any date is the sum of the market values of all investments in the plan on that date. The services of a pension appraiser normally would not be required to determine the value of this type of plan, unless a coverture fraction needs to be applied to the value or opposing council needs confirmation of the value. In most cases, the administrator of the plan can advise the employee as to the market value of his share of the investments in the plan on any specified date.

TYPICAL SCENARIO: On April 1, 1996 Mr. and Mrs. Jones separated. Mr. Jones had been enrolled in a Defined Contribution Plan. The benefit he is entitled to receive has vested but not matured. On June 1, 1996, you request, from the plan administrator, the value of the plan as of April 1, 1996. The administrator replies that Mr. Jones' share of the plan was worth $40,000. For equitable distribution purposes, the present value of Mr. Jones' plan on April 1, 1996 was $40,000 unless a coverture fraction should be applied.
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