Yes. PBGC and GM have been working since the plan was trusteed to ensure that each party has the information they need to determine benefits accurately and timely.
From the time the plan was trusteed, PBGC has been providing estimated benefit amounts for new retirees and beneficiaries to GM on a monthly basis. GM then uses those estimated benefit amounts to determine the tp-up benefits. In the summer of 2016, PBGC began issuing Benefit Determination Letters to let participants know the amount of their final benefit, which may be greater or lower than the estimated amount PBGC had paid in the past. Now that we have determined final benefits, we are sharing those benefit amounts with GM so that they can determine whether there are any adjustments needed to the top-up benefits they have been paying.
Yes. It is our understanding that GM will notify you of any changes to the monthly benefit you will receive from them as well as any under- or overpayments that may be due.
You are correct that for the majority of participants, most of the overpayment from PBGC resulted in GM paying less than it should have. However, PBGC cannot recover the overpayment from GM. PBGC’s payment of the Delphi plan benefit to a participant or beneficiary is separate from GM’s contractual obligation to pay a top-up benefit to that person. In other words, PBGC’s benefit-payment relationship is with the participant, not GM. By law, PBGC cannot recoup overpayments from someone other than the participant.
Note: Any plan benefits paid after July 31, 2009, the date the plan terminated – whether the payment came from Fidelity or directly from PBGC – are considered when determining any overpayment or underpayment amount.
Yes. In the majority of instances, the recoupment is attributable to amounts that PBGC was paying above what we are legally able to pay. Where GM determines that these amounts should have been paid by them, as part of the top-up benefit, they will “make-up” the amount of your benefit that is reduced by the recoupment.
GM will contact you directly with more information on this arrangement.
The lump sum that you receive from PBGC is counted as income and therefore, taxable
There may be relief under the tax code that you can use. For example, if the amount you owe to GM is more than $3,000, the “Claim of Right” provision under section 1341 of the U.S. tax code may be applicable in the year you make the repayment. This “Claim of Right” provision allows the taxpayer to deduct certain payments from income where those payments are owed to another party. This may help offset the taxability of the lump sum PBGC pays you.
If the amount you owe to GM is $3,000 or less, you may be eligible to claim certain itemized business deductions. The availability of the relief, however, depends on your adjusted gross income for the year.
You can learn more about the rules for claiming these deductions by following this link (see page 92 of the IRS publication): https://www.irs.gov/uac/about-publication-17.
PBGC is unable to provide tax advice based on your specific circumstances. Accordingly, you should consider consulting a tax advisor to find out how this tax relief may apply to you.