Recoup Excess Distributions

[Christine Roberts]

What recourse under ERISA or otherwise would the sponsor or trustees of a defined benefit plan have against a plan participant to recover excessive distributions made to the participant over a period of several years? The plan has already stopped future benefit payments but is still considerably in arrears. Also, the participant initially notified the administrator that the payments were too large but the administrator ignored the advice and kept the payments coming.

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[Guest Jeff Kropp]

The only action may be equitable in nature, under ERISA's catch all provisions (ERISA 502(a)(3)). You may need to do some research on this issue, but I know that this provision has been used by trustees to collect overpayments to third-party service providers (I drafted one such action).

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[Christine Roberts]

When the applicable plan provision (calling for offset of future distributions) fails to specify, how is the offset amount determined? For instance if a participant was entitled to a $400,000 pension paid over 20 years, but accidentally received (and spent) $1,000,000 in 10 years, is the $400,000 deemed to have been paid out within the 10 years or can the participant argue for a pro-rata treatment?