SECURE 2.0 Clarifies Overpayment Obligations for Plan Fiduciaries

TheSECURE Act 2.0 clarifies that plan fiduciaries are not always required to collect overpayments from participants or make corrective contributions for overpayments not collected from plan participants. Sometimes, collection efforts for overpayments will now be prohibited in cases where the overpayment was the result of an inadvertent error and the overpayment began more than three years before a participant or beneficiary receives notice of the overpayment. The legislation also requires plan sponsors to give participants and beneficiaries access to a dispute process to dispute overpayment recoveries. These changes are effective immediately. Plans should remember that the rules governing minimum funding for defined benefit plans have not been changed, meaning that the plan sponsor may need to repay the amounts if the overpayment has a significant impact on plan funding levels. For more information on the defined benefit plan minimum funding requirements, visit Tax Facts Online.: Q 3743. Note: Q is updated.