Guidance Clarifies Recouping Pension Overpayments

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By Kristen Ricaurte Knebel

Recent changes the Internal Revenue Service made to its Employee Plans Compliance Resolution System on recouping pension overpayments helped clarify for plans whether they are obligated to compel plan participants to repay overpayments, an IRS official said.

The Internal Revenue Service clarified in Revenue Procedure 2015–27 that plan administrators discovering overpayments do not need to ask for the money back from retirees who acquired the extra benefits before pursuing other methods for making their plan whole.

One of the reasons the IRS made the change to the compliance resolution system was that it was hearing that plans were trying to recoup overpayments from retirees because they thought they had no other choice, Pamela R. Kinard, senior technician reviewer in the IRS Office of Chief Counsel, Tax Exempt and Government Entities, said May 14 during a meeting of the District of Columbia Bar.

While plan sponsors were interpreting the compliance resolution system to have a very strict policy, that was not necessarily the case, Kinard said.

“Some people have been coming in and saying, look we made this benefit calculation error, we would like to repay the money ourselves,” and the Voluntary Correction Program “had been accepting these. But on paper, when you look at [the compliance resolution system], it looks like it’s not an option,” Kinard said.

The guidance also allows plan sponsors to make a correction by retroactively amending the plan, a clarification that is beneficial because when plans requested the ability to do so, they were receiving inconsistent responses from the Voluntary Correction Program, she said.

“It wasn't set in stone,” Kinard said. “What we were hearing was there is this flexibility” in the Voluntary Correction Program, “but on its face, it didn’t look like there was any flexibility.”

While the guidance in Rev. Proc. 2015–27 cleared up some things for plan sponsors, the IRS plans on coming out with more detailed guidance on the issue, Kinard said.

That forthcoming guidance most likely will be released after the IRS considers comments on the revenue procedure that are due by July 20.

For more information, see Compensation and Benefits Library's “Duties of Pension Plan Administrators” chapter.

To contact the reporter on this story: Kristen Ricaurte Knebel in Washington at

To contact the editor on this story: Michael Trimarchi in Washington at


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