Pension Valuations
Pension Valuation is for the asset that is overlooked most in divorce proceedings. When dividing the assets between a divorcing couple, pensions and any kind of retirement plans such as 401K, Keogh and IRS need to be divided equitably –known as equitable distribution. Some pension valuation methods only review that portion of the pension plan that has accrued during the marriage until the Complaint for Divorce is filed (Deferred Method).
With this method of pension valuation, it is important to assess any cost-of living increases and any appreciation that would be occurring on this portion earned during the marriage, but distributed in the future. That is why present value of the pension is not enough to determine pension valuation. Future payment of the currently earned pension will usually be eligible for cost of living increases. The present amount of the pension should increase in value between the time of the divorce and the time of actual payment. That increase in value is subject to be divided equitably and accounted for in the pension valuation.
The simple way to determine pension valuation by getting the pension balance is appropriate for determining the value of 401k plans, Keogh plans, and IRA’s. Annuities and pension valuation is more challenging. The right until death to receive monthly payments upon retirement is usually how a pension is defined.
However there are more benefits that a pension valuation needs to consider. Often after the pensioner dies, the surviving spouse will continue to receive benefits. These future payments to the spouse can be included in the pension valuation.
One way to do pension valuation (or the portion acquired during the marriage) is to determine the amount of money it was take to purchase an annuity (single premium) through an insurance company to give a benefit equal to what the pension would yield.
Published mortality tables are of use in another pension valuation method. The date of death can be determined from the mortality table. Pension valuation would then value the total of the monthly payments estimated. A discount of the total using the interest rate needs to be factored in, to determine present day value for the pension valuation.
Tax consequences need to be reviewed in any pension valuation. How was the pension funded? If payments into the pension were made with after tax dollars, the pension will not be taxed as it is paid out in the future. If payments into the pension were made with pre-tax dollars, then all of the payout will be taxed. That is a significant impact on the value. Pension valuations need to carefully evaluate any pension plan, as some plans are combinations of pre-tax and after tax payments. This of course will make the pension valuation more complex.
For Pension Valuation call Fussell Valuation Associates. Seven Senior Professional Appraisers with a total of 70 years experience in appraisals. We do valuations nationwide! Call 480 463 6579 for all valuation questions including business valuations, decedent estate appraisals, machinery & equipment appraisals, marital asset dissolution appraisal and much more. We also provide Expert Appraisal Witness Testimony.
cforms contact form by delicious:days
pension valuation,appraiser
Technorati Tags: pension valuation, appraiser
>
