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ineligible participant -assets already distributed


Guest meggie

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Guest meggie

A DB plan terminated 15 years ago and assets were distributed within the required timeframe. The plan no longer exists. Annuities were purchased in conjunction with the plan termination.

The employer now discovers that a person who was not eligible under the DB plan, (a non US employee), was in fact included in the plan as well as the plan termination and consequently a benefit was purchased. No payments have begun for that individual. The individual has not completed the paper work for a tax treaty.

How does the employer correct this? Can the insurance company revoke the certificate provided to this individual as mistake of fact and return the money to the employer (reversion)?? Seems to me that if an irrevocable commitment was made to the individual- then may be difficult to retract.

Thanks

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Before revoking this person's benefit, I would ask the question, "What if it were reversed and an eligible participant was not given a benefit?". I don't think you'd seek out that person to make him whole, just like I don't think you should take away from this person.

What's done is done is my feeling on this case.

"What's in the big salad?"

"Big lettuce, big carrots, tomatoes like volleyballs."

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Meggie: Hate to state to obvious but you must read the annuity contract to see if the annuity benefit can be cancelled for ineligible employees. Some contaracts will permit the employer to cancel benefits for ineligible employees and refund the money to the employer provided the appropriate indemnification is signed by the er in favor of the insurer.

mjb

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