Section 301(b) of Division T of the Consolidated Appropriations Act, 2023 [Pub. L. 117-328, 136 Stat. 4459 (2022) (SECURE 2.0 Act)] provided important correction relief for certain qualified plan overpayments. In short, the relief generally permits a qualified plan to allow participants to retain inadvertent benefit overpayments without the employer needing to make a corrective payment to the plan (or adopt a plan amendment). Moreover, certain overpayments are treated as eligible rollover distributions, so that amounts placed in an individual retirement account (IRA) or another qualified plan can remain there. Notice 2024-77 provides, in question and-answer format, important clarifications regarding the scope of this relief, and the impact on existing Revenue Procedure 2021-30 (“EPCRS”), which has a number of safe harbor provisions for correcting defined contribution and defined benefit overpayments.
In this Journal of Pension Benefits article, “IRS Issues Interim Guidance on ‘Inadvertent Benefit Overpayments’” Groom principal Elizabeth Thomas Dold summarizes the interim guidance and its impact on EPCRS, along with key next steps for plan sponsors to consider.
To read the article, click here.
