Managing Market Value Adjustments with Lincoln Financial’s Bill McLaren

In this episode of the 401(k) Specialist Podcast, we dive into the complex world of Market Value Adjustments (MVAs)—what they are, when they’re triggered, how they’re calculated, and why they matter.

Bill McLaren, Stable Value Business Leader for the Retirement Plan Services Business at Lincoln Financial, joins us to explain why MVAs can catch plan sponsors off guard—especially during a recordkeeper change—and what advisors can do to protect participants.

Find out more about stable value investment only solutions.

Key Insights

MVAs Can Surprise Plan Sponsors
Market Value Adjustments (MVAs) in stable value funds are often overlooked by plan sponsors, particularly during recordkeeper transitions. Many focus on crediting rates and fail to understand termination conditions, only discovering the financial implications when a move results in receiving less than the book value of their investments.

Mitigating MVA Risks Requires Preparation
Plan sponsors can mitigate MVAs through proper due diligence and understanding the specific stable value contract provisions. Options such as the “12-month put” guarantee full book value payout with proper notice. Sponsors should know whether their fund is portable and consult advisors early to avoid costly surprises.

Three Strategies to Address Negative MVAs
When faced with a negative MVA, sponsors have three main options:

• Partner with a stable value provider who can absorb the MVA and preserve participant account balances—ensuring a seamless transition between providers without financial harm.

• Pay the difference themselves (rare).

• Pass the loss to participants (unpopular and risky).

SEE ALSO:

• Stable Value Funds: Balancing Safety and Opportunity with Lincoln Financial’s Matt Condos

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Lincoln Financial affiliates, their affiliated distributors, and their respective employees, representatives, and/or insurance agents do not provide tax, accounting, or legal advice. Clients should consult their own independent financial professionals as to any tax, accounting, or legal statements made herein.

Lincoln Cornerstone Series® is the marketing name for Lincoln Financial’s suite of stable value investment only (SVIO) products, which includes the Lincoln Stable Value Account and the Lincoln Stable Value Separate Account. SVIO refers to the group stable value or group fixed annuity products Lincoln offers to a contract owner without providing participant recordkeeping services.

The Lincoln Stable Value Account and the Lincoln Stable Value Separate Account are group fixed annuities issued by The Lincoln National Life Insurance Company, Fort Wayne, IN. The Lincoln National Life Insurance Company does not solicit business in the state of New York, nor is it authorized to do so.

The Lincoln Stable Value Account is a fixed annuity contract issued by The Lincoln National Life Insurance Company, Fort Wayne, IN 46802 on Form 28866-SV 01/01, 28866-SV20 05/04, 28866-SV90 05/04, AN 700 01/12, or AR 700 10/09. Guarantees for the Lincoln Stable Value Account are subject to the claims-paying ability of the issuer.

The Lincoln Stable Value Separate Account is a fixed annuity contract issued by The Lincoln National Life Insurance Company, Fort Wayne, IN 46802 on Form 28866-SV 05/04, 28866-SV90 05/04, AN 700 01/12, or AR 700 10/09 and state variations thereof and is subject to state availability. Assets backing the contract are held in an account segregated from the general account of the issuing company. Any guaranteed amounts in the contract over and above the assets held in the separate account are provided by the issuer’s general account.

Lincoln Financial is the marketing name for Lincoln National Corporation, its insurance companies and broker/dealer affiliate Lincoln Financial Distributors, Inc. Affiliates are separately responsible for their own financial and contractual obligations.

LCN-8352590-090325