What Is a Plan of Allocation?
The plan of allocation is the rulebook for splitting a settlement fund. It decides how much each eligible claimant receives.
A plan of allocation is the formula a settlement uses to divide the net settlement fund among eligible class members. It spells out who gets paid, how each person's share is calculated, and what happens if there is more or less money than expected.
Why it matters to you
The plan of allocation is what turns a large headline number into your actual check. Two people in the same settlement can receive very different amounts depending on how the plan weighs their losses, purchases or time in the class. Reading it tells you which details on your claim form actually move your payment.
What a plan of allocation usually covers
- ✓How the net fund is calculated after attorneys' fees, administration costs and any incentive awards
- ✓Tiers or categories of claimants, such as people with documented losses versus people who only attest
- ✓A formula for each tier, such as a fixed amount, a per-unit amount, or a share of recognized losses
- ✓Minimum payment thresholds below which no check is sent
- ✓Whether payments are adjusted pro rata if claims exceed or fall short of the fund
The term is most common in securities cases, where the plan often calculates a "recognized loss" based on when you bought and sold shares. Consumer settlements use the same idea, sometimes under a different label in the settlement agreement.
A simple example
Imagine a fund that pays two groups: people who submit receipts for out-of-pocket costs, and people who simply confirm they were affected. The plan might reimburse documented costs up to a cap, then split what remains equally among everyone in the second group. If more people file than expected, each share shrinks.
Questions to ask when you read one
- ✓Is there a minimum payment, and would my claim clear it?
- ✓Does documentation move me into a higher tier?
- ✓Are payments fixed, or adjusted up or down based on the number of claims?
- ✓What happens to money left after the first round of payments?
Related terms
The court reviews the plan alongside the settlement at the fairness hearing, and class members can object to it. It governs the initial distribution and any later redistribution of leftover money.
SettleScout shows estimated payouts for settlements you match, so you can see which claims are worth the few minutes to file.
Frequently Asked Questions
Where can I find the plan of allocation?
It is usually in the long-form notice or attached to the settlement agreement on the official settlement website. In securities cases it is often a separate section of the notice.
Can the plan of allocation change after I file?
The court must approve it, and it can be modified before final approval. After approval, changes are rare and require court permission.
Why do some people get more than others in the same settlement?
The plan may weigh documented losses, number of purchases, or time in the class differently. Those factors can produce very different payments for people in the same case.
See every settlement you qualify for
Tell SettleScout which brands you use. It finds your matches, estimates your payouts and reminds you before deadlines.
Free to download