19-2-903. Correction of errors in payments. (1) If the amount of a contribution payment is incorrect, the board may reject the payment or accept the payment and approve any of the following methods to collect the correct amount:
(a) adjustment of subsequent payments from a member or an employer;
(b) installment payments or a lump-sum payment from an employer; or
(c) a lump-sum payment or a rollover from a member.
(2) If a purchase of service credit made pursuant to 19-2-704 is determined to be incorrect, the board may approve correcting the error by any of the following methods:
(a) adjusting the subsequent lump-sum or installment payments from the member or the member's employer;
(b) accepting a lump-sum payment or rollover from the member for the amount underpaid; or
(c) granting the member service credit proportional to the amount actually paid.
(3) If fraud or error results in a member, survivor, or beneficiary receiving more or less than entitled to, then upon the discovery of the error, the board shall correct the error.
(4) (a) Except as provided in subsection (5), if a benefit or payment is overpaid or paid to a person not entitled to receive the benefit or payment, the board may recover the full amount of the improper distribution, plus interest set at the assumed rate of return on the system's investments. The interest must be compounded annually and be applied monthly and must accrue from the date the recipient of the improper distribution received a final determination notice of the improper distribution until the total amount owed to the retirement system pursuant to this subsection (4) is paid in full.
(b) To recover an amount owed pursuant to this subsection (4), the board may adjust future benefit payments or arrange for another method of payment. For collection of amounts due, the board may pursue all remedies available by law to it, including but not limited to initiating a lawsuit or assigning or referring the debt to an attorney or collection agency.
(c) The board is entitled to recover its reasonable costs for pursuing collection, including but not limited to attorney fees or charges assessed by a collection agency. These costs may be added to the principal amount due under this subsection (4) and accrue interest as provided in subsection (4)(a).
(d) The recipient of an improperly paid benefit or payment is liable for repayment of the total amount owed pursuant to this subsection (4).
(e) The board may, for good cause, waive some or all of the interest charges or collection costs that may be assessed under this subsection (4).
(5) (a) If overpaid benefits or unpaid contributions resulted solely from an error made by the retirement system:
(i) the retirement system may recover the amount owed only with respect to the timeframe beginning 24 months prior to the date on which the retirement system issues an initial notice of the amount owed and ending when the amount owed is paid in full; and
(ii) interest may not be charged if the amount owed is paid within 30 days after issuance of the final staff determination.
(b) If the amount owed is not paid in full within 30 days after issuance of the final staff determination, the amount owed accrues interest at the retirement system's actuarially assumed annual rate of return, compounded monthly, beginning on the 31st day after issuance of the final staff determination. Interest continues to accrue until the amount owed to the retirement system is fully paid.