Employee Plans Compliance Resolution System

The IRS recently issued Revenue Procedure (REV.PROC.) 2021-30 with 2 new correction methods for overpayments to Defined Benefit Plan participants or Beneficiaries.

The new Revenue Procedure updates Rev. Proc. 2019-19 to:

Expand guidance on the recoupment of overpayments of Defined Benefit (DB) plan benefits.

The IRS says previous Revenue Procedures clarified the permissible methods for correcting overpayments under EPCRS by noting that, depending on the facts and circumstances, the correction may include requesting plan participants or beneficiaries return overpayments to the plan. The IRS says that based on comments it received from plan sponsors, it is further clarifying and expanding options available for the reimbursement of overpayments.

Previous guidance is revised to provide that the plan sponsors may offer overpayment recipients the option of repaying in a single lump sum payment or an installment agreement or through the adjustment of future payments.

First State Trust Company has always worked with the client or participant to come up with a solution that resolves the overpayment in the most timely and efficient way to not unnecessarily put a financial burden on the overpaid participant and make the plan whole.

First State Trust Company is a directed trustee, custodian and paying agent for traditional Defined Benefit Plans both corporate and governmental, Defined Contribution Plans as well as Multiple Employer Plans.  Paying agent services include processing of both lump-sum distributions and periodic participant benefit payments along with tax withholding and tax reporting (1099-R’s and or W-2’s).

I can be contacted at 302-573-5972 or jrobinson@fs-trust.com for any questions.

James Robinson, Vice President/Trust Officer

 The posts expressed are views of FSTC and are not intended as advice or recommendations. FSTC does not offer tax or legal advice, professional counsel should be sought for tax or legal advice. For informational purposes only.