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

The views expressed are those of the speaker/writer and not necessarily those of any Lincoln Financial® affiliate. Neither the information, nor any opinion expressed herein shall be construed as investment advice. All investments involve risk, including possible loss of principal.  

Lincoln Financial is the marketing name for Lincoln National Corporation and its affiliates.

Affiliates are separately responsible for their own financial and contractual obligations.

Lincoln Financial Distributors, Inc., a broker-dealer, is the wholesale distribution organization of Lincoln Financial and may act in a wholesale capacity for this product. Unaffiliated broker-dealers also may provide services to customers.

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.

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.

This material is provided by The Lincoln National Life Insurance Company, Fort Wayne, IN, and, in New York, Lincoln Life & Annuity Company of New York, Syracuse, NY, and their applicable affiliates (collectively referred to as “Lincoln”). Lincoln does not provide investment advice, and this material is not intended to provide investment advice. Lincoln has financial interests that are served by the sale of Lincoln programs, products, and services.