QDRO - Incorrect Amount Paid

[msmith]

QDRO Alternate Payee was paid too much from ex-Spouse's 401(k) Plan. What if anything can be done to disgorge the funds from her IRA and pay back to the Plan? What about the loss of investment opportunity?

Any assistance would be greatly appreciated.

[Jim Chad]

The excess is not eligible for rollover. Was it sent electronically? Can it be reversed?

Have you tried having the company that sent the money contact the IRA company?

You may want to try sending a letter to the Participant explaining the error, that it is not eligible to be in the IRA and if it is not sent back to the Plan it will be reported to the IRS. ( A corrected 1099 does need to be done if it is not sent back)

[msmith]

The IRA Rollover was issued in check form. The IRA's Financial Advisor is willing to disgorge the funds and received approval from their Broker/Dealer. Unfortunately, the Alternate Payee is another issue. A letter of correction with both calculations have been sent to the Alternate Payee, Participant and Plan Administrator.

[GMK]

As a suggestion, send the information to the Alternate Payee's lawyer.

The AP obviously does not believe the evil twins (the participant and plan administrator), but the AP may be more receptive to the lawyer's explanation of what happens if the excess is not returned.

[Peter Gulia]

Milgram 10-1862_opn.pdf

In the attached Second Circuit decision, the court held that a participant’s claim against a plan itself (rather than the plan’s administrator) is valid, even if enforcing that claim means subtracting amounts from the individual accounts of all participants. (The plan had paid an alternate payee more than a QDRO specified, and the participant demanded restoration of what belonged to him.)

A plan's administrator (and other fiduciaries) might think about this before too hastily giving up on pursuing the plan's legal and equitable remedies to get a return of the overpaid amount.

[david rigby]

As a suggestion, send the information to the Alternate Payee's lawyer.

... assuming the letter will answer the question, "why is it incorrect?"