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In November 2018, while still employed full-time, I received an early distribution from my Prudential retirement plan that my (former) employer now claims was not available under the terms of the plan. Subsequently, Prudential Retirement informed me that I "received an overpayment in the amount of $8614.18 that was not eligible for a rollover." Prudential is requesting that I pay back this amount in full. I conacted Prudential to explain that this 2018 early withdrawaI was NOT a rollover to an IRA nor to any other retirement plan. At the time of my initial withdrawal request in 2018, I explained to Prudential that I needed the money to pay down miscellanous household, credit card, and medical care expenses. This early distribution was processed without delay, and was ultimately reported on an 1099-R for tax year 2018. I retired in July 2019, and am now receiving monthly payments from that same Prudential retirement plan. However, I'm extremely dismayed over this recent issue, and Prudential has been vague about my options or rights. Bottom line: I am unable to pay back this overpayment amount. I believe I'm the victim of an egregious clawback. What must I do? What can I do?

I have an issue that just arose, I was notified by my previous employer plan sponsor that I was overpaid when I left my 401k. I was overpaid roughly $6000 due to an error by the plan administrator back in 2016. I have since rolled those funds into my own personal IRA and now Vanguard is requesting I give those funds back. I dont feel that I am obligated to return those funds as I was not the one who made the mistake and in most lines of work you are held accountable for mistakes and not allowed to pass them off to someone else. Additionally I dont feel I should have to pull those funds from my IRA which would be an early distribution (additional tax consequence) and I would then need to amend my tax return from 2016 which is time and resources spent when that would not be necessary had this error not occurred. I am curious if anyone has insight into what my rights and options are? I can obviously not respond but dont want to have a law suit on my hands and dont want to have this issue come up in 20 years when they claim some crazy thing like I now owe them $50,000 because of inflation and interest.

Has anyone had any experience with the iRS regarding recoveries of withholding overpayments made by a pension plan or is aware of any guidance? For example, assume that a pension plan continues to pay benefits to a deceased retiree's bank account and the joint holder of the account retains the funds or the funds are returned to the plan by the bank. An IRS letter dated May 15, 2003 from the Office of Chief Counsel entitled "IRS Letter on Recovery of Erroneous Withholding" states that the plan can file Forms 843 and 941c (apparently Form 941c was replaced by Form 941-X). The guidance contained in this May 15, 2003 letter appears out of date. And it would appear that IRS Form 945x is more appropriate. IRS Letter May 15, 2003 re withholding recovery.pdf

Hi yall, I'm working on a 2017 Form 500 for a plan and have a small issue There was one participant got refund of $50 loan principal overpayment in 2017 for a 2016 loan. How can i characterize this refund on 5500? I was thinking about putting that $50 as negative ($50) in other income or $50 in the Benefit payment - directly to participants. I looked into 5500 instruction Line 2c. Other income. Enter all other plan income for the plan year. Do not include transfers from other plans that are reported on line 2l. Other income received and/or receivable would include: 1. Interest on investments (including money market accounts, sweep accounts, STIF accounts, etc.). 2. Dividends. (Accrual basis plans should include dividends declared for all stock held by the plan even if the dividends have not been received as of the end of the plan year.) 3. Rents from income-producing property owned by the plan. 4. Royalties. 5. Net gain or loss from the sale of assets. 6. Other income, such as unrealized appreciation (depreciation) in plan assets. To compute this amount subtract the current value of all assets at the beginning of the year plus the cost of any assets acquired during the plan year from the current value of all assets at the end of the year minus assets disposed of during the plan year. Line 2e(1) Directly to participant. payments made (and for accrual basis filers) payments due to or on behalf of participants or beneficiaries in cash, securities, or other property (including rollovers of an individual’s accrued benefit or account balance). Include all eligible rollover distributions as defined in Code section 401(a)(31)(D) paid at the participant’s election to an eligible retirement plan (including an IRA within the meaning of Code section 401(a)(31)(E)); How do yall think this should be in the 5500? I'm leaning more on the Benefit payments directly to participant. This is a new situation for me. I appreciate all the inputs. Thank you.

The plan sponsor failed to file the final/short form 5500 for the plan year ending 5/31/2016. We recommended DFVC, filed the return in November 2017 and paid the $2,000 penalty (this is a large plan) . The DOL's online calculator correctly indicates that the penalty is $2,000 (based on 313 days late). The client received a letter from the DOL stating that they might have submitted an overpayment of $1,260 and included an ACH form for the plan sponsor to request the refund. We called the DFVC number on the letter but got voicemail and have yet to receive a call back from them. Any indications as to what might have triggered the letter? Anyone had any success in addressing this with the DOL? We don't want to overpay the penalty but we are pretty sure the penalty is $2,000 and not $740.

Pension plan erroneously made a lump sum distribution to an individual who had never been a participant in the plan or worked for the employer. Do the ECPRS correction procedures for an overpayment apply here or is there something more specific to this situation? The ECPRS definition of overpayment refers to a payment to a "participant or beneficiary" - and this individual was neither. Here's the story - former employee allegedly provides a name and SSN that do not belong to him he was hired. Employee Bill participates in the pension plan under the false name and SSN for a few years but is eventually terminated for providing false employment documents (apx. 2008). In 2016, the individual whose name and SSN were used by the former employee applies for social security and receives a 'Potential Private Pension Benefit Notice' regarding the pension benefit under his name and SSN. He contacts the employer (whom he never worked for), files a claim, and is paid a lump sum distribution of apx. $7,000. He provided a different DOB than what was on file for the former employee but that was not caught at the time. Someone how he learns there is a 401k benefit under his name/SSN as well and while trying to get that paid to him, he discloses to the employer that he had never worked for the employer and was allegedly a victim of identity theft by a cousin. Recipient is refusing to pay the $7,000 distribution back to the plan. I'm clear on the rights of the real former employee to the benefits he earned while working, despite the incorrect SSN, and that he will have to provide a valid SSN or TIN to receive distributions from the qualified plans. But how does the employer correct the $7,000 distribution to other guy? Do the ECPRS overpayment procedures apply? Does the employer have any avenues available for recoupment that they would not have if this was an overpayment to an actual participant (i.e. does this guy have rights under ERISA here)? The employer made the error here, but the recipient also made a claim for benefits from a plan he knows he never participated in. He has acknowledged that the former employee participated in the plan and "earned" the pension benefit using the recipient's SSN. Any thoughts would be appreciated!