Recoupment of overpayments made to deceased participant

[Guest TroyRiley]

Could someone please provide information on acceptable methods of recouping overpayments made to a participant after his death. Basicially, my company has paid many monthly retirement benefits before we receive notification of the participant's death. This has occurred both by check and also by electronic fund transfer. In many instances, the personal representative of the estate, or a family member with access to the decedent's account, will take the money, spend it, and not respond to any type of letter requesting repayment. Is this type of matter governed by state law? Who would prosecute these cases? Or, are the only available remedies civil in nature? Thanks for any information you can provide.

[david rigby]

There may be other prior discussions about this. Try the Search feature.

For example: http://www.benefitslink.com/boards/index.php?showtopic=21594

The usual starting point is to determine why; that is, did someone (who? plan sponsor, trustee, beneficiary, etc) do or say something that is the heart of the problem? The plan's legal counsel will advise whether the recieiving financial institution has any culpability; typically, death will have a bearing on whether an account is "frozen".

Your message implies the possibility of fraud. Again, the plan's legal counsel will help determine that.

You may also need better controls on timely notification. The trustee will probably have some suggestions in that area.

[mbozek]

I am assuming that the excess payments are from a DC plan not a DB plan. Any checks payable to a participant which are cashed after death should be be placed in the estate's account. Endorsement of the check by another person would constitute fraud or conversion under state criminal or civil law. Usually a strong letter from the attorney representing the plan will result in a return of the funds.

If the payments are made by wire transfer why didn't the plan reserve the right to reverse the transaction in the case of overpayment?