Unexpected excess assets from plan term

[Medusa]

Late last year, we terminated one of the sponsor's two defined benefit plans. The plan had excess assets that were allocated to participants. All the distributions occurred before 12/31 and everyone was pretty much thinking that 2000 would be the last 5500.

Now the insurance company who provided the annuities has come forward and stated that they made an $11,000 error on the annuity purchase. They charged $11,000 too much and want to send a check back to the plan. Can anyone think of any way to deal with this without having to do another 5500? Unfortunately there are no plan expenses to deal with, these were all paid by the plan before terminating it.

There is probably not a good answer here but I feel obliged to ask. Thanks in advance for any responses.

[Guest PAUL DUGAN]

I would suggest that you tell the Insurance Company to prorata increase all annuities. This should not require a 2001 5500 since the 2000 form would show all funds used to buy annuities.

[RCK]

I think Paul is on the right track, except I'd make sure that this excess is allocated in exactly the same manner as the original excess. Then you end up in the same place as if the calculation had been right in the first place. This will be a nuisance for the insurer, but as long as they messed it up in the first place, they should not give you too much grief about that.

And it should keep you from filing another 5500.

rk