Collection Agency

[Guest pensionz]

Has anyone used a reputable collection agency for pension overpayments? Thank you!

[Guest b2kates]

My prior experience was that collection agencies were not effective and it usually took an attorney's intervention.

are you talking about excess lump sum payments or monthly payments. Often we were successful based on the materiality of the overpayment to get it back. But it was always fact sensitive.

In one situation the payment made in error was in excess of 200000 and we were able to convince the local district attorney's office to look at the question of "theft by deception" but again we had a good fact trail.

[mbozek]

What kind of overpayments? Lump sums or perodic payments? Also what was the reason for the overpayments. There was a case that denied a plan's right to a return of overpayments where the fund did not discover the excess payments for 9 years. As discussed, collection agencies are very inefficient because their fee is between 25-50% of amount recovered. The plan admin is better off convincing the participant to return the money without any adverse tax consequences.

[Kirk Maldonado]

Where the person had rolled over an improper distribution, informing them that the rollover did not qualify for favorable income tax treatment and that the distribution would be reported to the IRS as not qualifying for rollover treatment was enough to get the person to return the money for one of my clients.

[Guest pensionz]

The overpayments are pension monthly benefits due to death of the member, overpayment of 5 or 10 year certain/guaranteed pensions, etc. The overpayments vary from several months overpaid up to two years overpaid. We have approached the recipients of the overpaid benefit and not received any funds to date. Thanks for all your questions and input!