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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4491
Experience:  Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
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I was overpaid $16,610 by federal workers compensation. I applied

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I was overpaid $16,610 by federal workers compensation. I applied for a waiver to not have to pay it back. They told me the overpayment was not my fault, however I would have to pay it back. They said baised on monthly income to debt ratio I qualified for the waiver, however based on assets I did not. They are counting my TSP retirement as an asset. I don't think they can do that, because its for my retirement and I would have to take out a loan to access it. How can a loan be considered an asset?
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Hi,

I almost am afraid to answer this question because I hate having to be the messenger.

Please understand that I share everything I know here in an effort to give you all the facts, so that hopefully you can "see around some corners," if you will, in the future.

First, the TSP's being taken into consideration, as an asset, (asset meaning something that has a value, or a balance ... rather than an income, such as a regular flow of money, like a salary or a monthly pension) isn't really related to how you might have to access it ..... they're just using a checklist of the things they are supposed to count and plugging it into a formula.

The basic financial statements are the income statement and the balance sheet (for both businesses and people), although the balance sheet is usually called a net worth statement on the personal side.

Income statement is income minus expenses ( a measure of net income coming to you) and the balance sheet is just a current snapshot of what you own (assets minus debts).




And the formula they use simply says, in this case, that

(1) although you may NOT have the income coming in to pay it back but that ...

(2) (in sum total, and retirement plans - including a TSP - is just one of the assets that the law says that goes into that formula) you DO have enough overall assets that you should be able to pay it back over time, somehow.

It has more to do with your overall financial health, that exactly where the money might come from, to pay it back.




And just, again, to give you all the facts hopefully to know what you have to be watching for, here's a recent (I'll post a link so you can read the whole thing) memo from the Justice department about whether the TSP, specifically, can be levied:

Here's the summary, at the top of the Memo:

Your office has asked whether Thrift Savings Plan (“TSP”) accounts, which permit tax-deferred retirement savings for certain federal employees, are subject to federal tax levies under sections 6331 and 6334 of the Internal Revenue Code, ...We believe that TSP accounts are subject to federal tax levies under the applicable statutes.

Here's the whole Memorandum: http://www.justice.gov/olc/2010/tax-levy.pdf



So although the qualification formula only looks, generally, at your overall ability to pay the money back over time (and I would certainly ask them to work out a long payback plan, which I believe they will), the memo shows a WORST CASE scenario...

That if you simply refused to pay it back, and after after what would probably be a fairly long process of their trying to collect, they COULD (at least we know that the justice department would support it) levy the TSP, (and take some of that money to pay it back).




I apologize for the data dump here, but I wanted to give you enough information to see things in context, and again, be able to think through what your options might be and what the possibilities are.

My recommendation would be that you work out an EXTENDED payment plan with them.

You certainly have evidence (by their own admission that your income isn't the strong part of your total financial situation) that you would need an extended amount of time to pay it back.




Hope this helps,

Lane

I hope you'll rate my answer based on it's thoroughness and accuracy, rather than on any good news/bad news content. AND be cure to come back here, if you have further questions on this so you won't be charged for another question, (and feel free to bookmark for future reference)
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4491
Experience: Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
Lane and 7 other Tax Specialists are ready to help you
Expert:  Lane replied 1 year ago.

Darren,

As a follow-up I just found this:

If you can't afford the minimum payment

You will need to make payment arrangements. Contact us:
  • Email Benefit Control Unit
  • Fax:(NNN) NNN-NNNNbr/>
  • Call the Benefit Payment Control Unit:

    Toll-free: (NNN) NNN-NNNNbr/>
    Olympia: (NNN) NNN-NNNNbr/>
    TTY local: (NNN) NNN-NNNNbr/>
    TTY toll-free: (NNN) NNN-NNNN

 

here's the link to the page this is on:

 

http://www.esd.wa.gov/uibenefits/communication/overpayment/repay-overpayment.php

 

 

 

 

Lane

 

 

Expert:  Lane replied 1 year ago.

Thanks so much for the feedback Darren.

I hope I was able to help a little.


To ask for me again, say “For NPVAdvisor” at the beginning of your question

OR

Go here: NPVAdivsor … and enter your question in the box.

Thanks again,

Lane

Customer: replied 1 year ago.

thank you Lane. All I needed was for somebody to give me an honest informed answer and you did that. I rated you excelent because of that. Just because I may not like the answer has nothing to do with your timely and professional response. You might be happy to know that I have arranged a repayment schedule of $50 a month! I may die before I repay the whole amount, but at least $50 a month won't hurt! Lol! thank you again.



Darren

Expert:  Lane replied 1 year ago.

That's great!

So glad to hear.

Just get back to saving when you can, and you'll more than offset it.


Best

Lane

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Lane
Lane
JD, MBA, CFP, CRPS
3630 Satisfied Customers
Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986