Paid Terminated Employee Twice

[Guest Mike Spickard]

Hypothetical - A terminated participant (MM) was paid out his DC vested balance in 1997. Client signed off on payment in 1997. Client changed TPA's and Trustees. In the confusion of transferring, new TPA never received information that MM was already paid out, so they set up a beginning balance based upon last ending balance. MM was paid out again in 2000. Client signed off on second payment in 2000. Error was discovered in 2001 and client sues new TPA for instructing client to pay MM again after he had been paid. MM went bankrupt in 2001.

No evidence was produced that new TPA knew about prior payment to MM. Any thoughts on what to do if this hypothetical situation should ever occur? Thanks.

[Guest b2kates]

It appears that client never reviewed its own payment history.

why did it take 3 years for second payout? and is client also the trustee, should have been liable for not reviewing distribution history.

[WDIK]

How, hypothetically speaking, did the hypothetical TPA reconcile the hypothetical assets to the hypothetical account balances that hypothetically include the hypothetical participant that was hypothetically paid out twice?

[Guest Mike Spickard]

In the hypothetical balance-forward environment, hypo client was asked to provide contributions, distributions and trust balance information. The rest was hypothetically "plugged" and hypothetical trust statements were not provided to TPA that showed the hypothetical payments being made.

[WDIK]

Since there is already hypothetical litigation, I would recommend retaining hypothetical legal counsel.

[Ron Snyder]

I have hypothetically seen the opposite occur: a client changes TPA firms and notifies the new hypothetical TPA firm that a participant was paid out but that the hypothetical prior TPA had those records. The hypothetical release form is either in possession of the prior TPA or the amount was hypothetically less than $3,500.

Your post points out the problem with posting an hypothetical question, in that simple modification of facts yields a different conclusion.

[Guest Mike Spickard]

"simple modification of facts yields a different conclusion" - Hmmm, I hadn't thought of that before. Thanks for the cogent observation.