ERISA Pension Plan Overpayments: Navigating Conflicting Fiduciary Obligations and IRS Guidance

Preventing or Uncovering Errors Before Distribution, Restoring Losses and Protecting the Plan's Tax Qualification

Recording of a 90-minute CLE webinar with Q&A


Conducted on Wednesday, July 8, 2015

Recorded event now available

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Program Materials

This CLE webinar will provide guidance to ERISA and employee benefits counsel on addressing pension plan overpayments to participants and beneficiaries. The panel will discuss best practices for preventing costly errors, options for recouping payments and restoring losses to the plan, the equitable claims that could be asserted by payees and strategies to help plan sponsors meet ERISA fiduciary obligations that may be more extensive than the requirements in IRS guidance.

Description

Pension plan overpayments to participants and their beneficiaries are a common occurrence. Benefit calculation errors may not be discovered until years after a retiree has been receiving payments. One union discovered it had overpaid retirees for more than 30 years to the tune of $5.2 million. A city is seeking the return of $659,000 in overpayments to retirees.

ERISA plan fiduciaries have an obligation to stop overpayments and restore plan losses resulting from overpayments. There are several options for recovering overpayments, including seeking one-time lump sum payments, structured repayments over time, or reductions in future pension payments. When repayment cannot be secured from the recipient, plan sponsors' fiduciary obligations require them to find other alternatives for repaying the plan, which may involve making a contribution from the sponsor's general assets.

Further complicating matters, the IRS recently clarified that plans are not required to recoup overpayments, but any alternatives they choose must be allowed under the tax qualification rules applying to retirement plans.

Listen as our authoritative panel discusses how plan fiduciaries and sponsors can respond to pension plan overpayments. The panel will discuss best practices for preventing or uncovering errors, recoupment options and other alternatives for plans, and reconciling potentially competing obligations under ERISA and IRS guidance.

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Outline

  1. Recoupment of overpayments
  2. Alternatives to recoupment
  3. Is a lawsuit to recover overpayments appropriate?
  4. Review of cases and the arguments payees can raise
  5. Tax implications
  6. Participant claims and appeal rights
  7. Preventing calculation errors

Benefits

The panel will review these and other key issues:

  • What are the tax implications for pension plans and participants in the event of overpayment or recoupment?
  • What factors should plan fiduciaries consider in selecting a method for recouping overpayments?
  • What administrative procedures should be made available to participants following an overpayment?
  • What procedures should plan sponsors have in place to prevent benefit calculation errors?
  • What are the special challenges facing public pension plans that have discovered overpayments?

Faculty

Carol Buckmann
Carol Buckmann

Counsel
Osler Hoskin & Harcourt

Ms. Buckmann has practiced in the employee benefits field for over 30 years, advising clients on all aspects of...  |  Read More

Arthur A. Marrapese, III
Arthur A. Marrapese, III

Partner, Employee Benefits Practice Leader
Hodgson Russ

Mr. Marrapese has practiced employee benefits law since 1986, and his extensive experience covers all aspects of the...  |  Read More

William H. Woolston, Esq.
William H. Woolston, Esq.

Covington & Burling

Mr. Woolston’s practice focuses on all aspects of employee benefits and executive compensation for companies in a...  |  Read More

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