Earlier this year, the IRS issued guidance clarifying the agency’s stance on pension overpayments, indicating that companies are not required to recoup accidental overpayments from retirees. The IRS said that in lieu of seeking recoupment from participants, employers could contribute the amount of the overpayment to the plan, or amend the pension to what the participant had been receiving.
David Godofsky, partner and leader of Alston & Bird’s Employee Benefits & Executive Compensation Group, said he believes the IRS guidance could have an impact on plans that overpaid beneficiaries.
“In my experience, plan sponsors don’t go through this pain because they want to collect money from retirees. It’s because they think the IRS requires it,” Godofsky said. “This will help educate plan sponsors about the options that have always been there.”