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. 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.