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I Need the Money Back, Now! What to Do When You’ve Overpaid Your Retirement Plan Participant

August 22, 2023 (3 min read)

Asking for money can be an uncomfortable thing. Before SECURE 2.0, it seemed that plan administrators were obligated by fiduciary rules to at least try—maybe become demanding—when trying to correct a plan overpayment. SECURE 2.0 provided some breathing room, giving plan administrators discretion to decide not to recoup an "inadvertent” benefit overpayment. Learn more about how to proceed.

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  • SECURE 2.0 Act of 2022 Passed: Overpayment Provisions Now Effective
    Review the new rules now set forth in I.R.C. § 414(aa) and ERISA § 206(h) (29 U.S.C. § 1056(h)). One of the new rules provides that, if the plan seeks to recoup past overpayments of a non-decreasing annuity and the administrator accomplished this by reducing future benefit payments, (1) the amount recouped each calendar year must not exceed 10% of the full dollar amount of the overpayment, and (2) future benefit payments cannot be reduced below 90% of the periodic amount otherwise payable. This less severely impacts pension plan annuitants who are subject to a repayment of prior overpayments.
  • EPCRS Correction Rules and Procedures 
    Discover additional rules dealing with the correction of overpayments in the IRS’s Employee Plans Compliance Resolution System (EPCRS). Subject to the requirements described in Rev. Proc. 2021-30, a plan sponsor may correct an overpayment by adopting a retroactive amendment to conform to the plan's operation, or it may correct the overpayment following other provisions of EPCRS. 

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