Q&A: Administrators: Administrative

The verbiage on our Authorization Agreement is:
"I hereby authorize ProBenefits, Inc. (hereinafter Plan Service Provider) to initiate credit entries (electronic and otherwise) and, if necessary, debit entries and adjustments for any erroneous credit entries to my Personal Bank Account in the financial institution named below (hereinafter Financial Institution) to credit and/or debit the same to such respective accounts."

This verbiage is present to allow correction in event of error.  (If we deposited $1,000 instead of $100 into an account, this allows recovery of the erroneous amount.)  Employers need this protection, since theirs is the account from which reimbursement funds are drawn.

We debit an account to reverse an error, but occasionally the need does arise. The bank that processes our ACH file approved the verbiage since they would have to process any such transaction.

Ours is standard verbiage for direct deposit forms. Here are examples of other similar forms:

Paychex:

"....In the event that COMPANY deposits funds erroneously into my account, I authorize COMPANY to debit my account for an amount not to exceed the original amount of the erroneous credit."

SC State Retirement system:

"I hereby authorize the SC Retirement Systems to initiate credit entries and adjusting entries (credit or debit) necessary to make corrections to my checking/savings account. I further authorize the financial institution below to credit or debit this account for the same reasons."

We again emphasize that any such reversal would be an unusual occurrence, but the protection needs to be there, and thus the disclosure to the participant.