RETIREMENT VALUE, LLC RECEIVERSHIP
Frequently Asked Questions From Investors
Q: How does the Receiver determine when to distribute money and how much to distribute?
A: The Plan of Distribution forbids the Receiver from making a distribution unless he has more money than necessary to meet the Plan’s reserve requirements. The Plan requires that the Receiver reserve at least enough money to equal “the needed premium reserves calculated at the 97 ½ percentile in the most recent stochastic model prepared by the Receiver's actuaries plus (b) the amount calculated by the Receiver as necessary to meet anticipated future expenses.” Plan at 14.
Based on his experience with the portfolio and the number of maturities that have occurred since the last distribution, the Receiver has a general idea of the reserves that he needs to maintain. When the cash on hand exceeds his estimate of his needed reserves, the Receiver will ask his actuaries to prepare a stochastic analysis of the portfolio to determine the required reserves. If the cash on hand exceeds the required reserves, the Receiver will distribute the excess cash.
Making a distribution costs money – for actuaries to run the stochastic analysis; for lawyers to file the motion with the judge; for the Receiver’s time; and for stamps, envelopes and check stock. Accordingly, the Receiver will only make a distribution where the amount to be distributed is sufficient to justify the costs involved.
Q: So, what is a stochastic analysis?
A: A stochastic analysis is a statistical modelling technique used to predict the outcome of unpredictable events. In our case, the unpredictable events are the deaths of each of the insureds. When an insured dies determines how much in premiums we will need to pay and how much we will receive in death benefits after taxes. Thus, the stochastic analysis can tell us how much income (death benefits in excess of premiums) we can expect the portfolio to generate over its lifetime as well as the reserves that we need to maintain in order to pay premiums.
To run the analysis, the actuary creates a simulation based on the probability that each insured will die during any given year based on the insured’s life expectancy. The actuary will run the simulation 20,000 or more times, each time randomly changing the probability of each insureds’ death. Comparing the results generates a range of likely results and allows us to identify the most likely result.
Q: How much am I going to get back?
A: We don’t know the exact number. The actuarial models project a return that is roughly equal to the amount that Retirement Value and Hill Country Funding raised. We expect the portfolio will generate between $64 million and $98 million dollars, with the most likely outcome being $82 million.
Q: I invested through my IRA, am I required to keep my claim against the estate in my IRA?
A: No. You should be aware, however, that distributing your claim from your IRA may have tax consequences depending upon the type of IRA (Roth or standard) and your age. Accordingly, I encourage you to consult with a tax professional of your choosing. The Internal Revenue Service provides information and answers to common questions about IRAs and other retirement plans on its website (www.IRS.gov). You may also contact the IRS through its toll-free tax assistance line at (800) 829-1040.
Q: Must I keep using my current IRA custodian?
A: No. That is a contractual relationship between you and your custodian. If you want to change your IRA custodian, you will need to identify a substitute custodian that is willing to assume custody of your investment in RV and your claims against RV. The substitute custodian can then coordinate a transfer of these assets from your current custodian. Once the substitute custodian has assumed custody of these assets, it must notify my office of the transfer and provide me with appropriate documentation, so that we may update our records accordingly.
Q: What is the value of my claim against the estate? I need to know so that I can take a distribution from my IRA.
A: Unfortunately, we cannot value your claim. You should consult with an investment professional to determine how you should value your claim.
Every quarter, the Receiver publishes a quarterly report that includes a liquidation analysis of the estate’s assets and claims. You can find the quarterly reports on the Investor Communications page.
Your investment professional should review the website and the Receiver’s reports. As an example, your professional should note that the Court combined the estates of Retirement Value and Hill Country Funding with 94.7% of distributions paid to the RV investors and 5.3% of distributions paid to HCF investors. The breakdown of claims between RV and HCF investors is shown on the latest Schedule of Claims, which you can find on the Claims page.
Q: How do I report distributions for tax purposes?
A: We cannot provide you with tax advice and must refer you to your tax advisor and to the information available on IRS.gov. Your tax advisor should review this website and the Receiver's Reports for additional information.
Q: Is the Receiver my lawyer?
A: No. The Receiver is not your lawyer and does not represent your personal interests. Instead, he has been appointed by the Court to manage the affairs and assets of Retirement Value for the benefit of its creditors and members. The same is true for the Special Receiver. Similarly, the lawyers representing the Receiver and the Special Receiver – Akerman, LLP, Dykema Cox Smith, K&L Gates LLP and George Brothers Kincaid & Horton LLP – do not represent the investors either individually or as a group.