Guest durfe Posted December 2, 2004 Share Posted December 2, 2004 If mandatory pension contributions were picked-up in error, how are they to be treated? Must they be refunded as soon as administratively possible? Or can they only be distributed after separation from service? For example, a participant is required to have only 5 percent of his salary picked up. However, 8 percent was being picked up instead. An excess of 3 percent was being picked up. Would this be corrected the same way as contributions that exceed 415© in the case of defined contribution plans? Link to comment Share on other sites More sharing options...
vebaguru Posted December 6, 2004 Share Posted December 6, 2004 Are you referring to a governmental 414(h) "pick-up" plan? If not, what type of plan are you referrring to? In any event, the plan document may permit refunding the excess contributions made by the employer. Review the doc. Link to comment Share on other sites More sharing options...
david rigby Posted December 6, 2004 Share Posted December 6, 2004 Since this is the Governmental Plans forum, I'll assume the original post is intended to refer to 414(h). This sounds like a problem with payroll processing. But, just how long has the incorrect percent been applied? If briefly, can you correct it by applying payroll adjustment? I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice. Link to comment Share on other sites More sharing options...
Guest durfe Posted December 6, 2004 Share Posted December 6, 2004 This is a governmental defined benefit plan for which the employee contributions are picked up under 414(h). Generally, the excess contributions result from using the wrong contribution rate. The plan uses an age-based contribution rate schedule. For example, if the participant gives us the wrong birth date, he will be paying the wrong rate. If a data entry error occurs, the wrong rate can also be used. As far as the time frame for the wrong rate being used, it could have been a couple of months to a couple of years. Link to comment Share on other sites More sharing options...
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