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Son of a... I was in aisle 6!!

Thanks Larry - I worked out the math on it using actuarial notation a while back, just to prove it to myself. I found it to be a very useful exercise.

Yes, but as noted previously, why aren't you just sending them a check from the plan and not involving PenChecks?

What you need to do is fill out the appropriate form with your current IRA custodian, electing a direct transfer to a qualified plan and give them all the appropriate/requested info. That will (almost!) guarantee that the reporting is correctly handled. DON'T try to explain to them the WHY of this transaction; they don't care, and there is always a chance that such additional involvement will only screw it all up for you.

Why are you rolling over the small balances instead of cashing them out? Balances under $200 do not even need to be provided with the special tax notice.

Question 1: No. Question 2: $160,000. Comment: even if there was NO bond and you reported it correctly, the DOL would come back and say you have to get a bond and then you get it and they go away. There is (almost) never any real penalties associated with bond issues so long as you have the right bond amount at some point.

I have a different take; a client who ignores our requests (especially REPEATED requests), gets fired.

You need to provide us much more information. It is always preferable to give us the specific details of the specific situation along with the specific plan provisions that you do have. So, do you have a participant with two outstanding loans? What are the specifics of each loan? What does the plan say with regard to loan limitations (how many loans at one time, etc.)? I doubt you an do what is being suggested. However, if the plan allows and if the numbers work, one possibility it to take a new loan that pays off the two existing loans (this assumes you don't exceed any loan limitation, but you didn't give us the necessary info to know if that is possible). I'm going to leave it at that until you provide the gory details as requested above. And for everyone else who lurks out there.... ALWAYS ALWAYS ALWAYS give us ALL the details; our business is completely fact specific, and without all the facts on a situation, we are just wasting our time trying to cover every possibility of what MIGHT be the question.

No, participants are not double taxed on loans. I'd be happy to prove it mathematically if you like. Even though loan repayments are made with after-tax money, the loan withdrawal, unlike a plan distribution, is not taxed.

Be careful about a plan or employer official getting involved in personal matters of employees, especially in giving tax advice. The specific requirements for plan disclosure about taxes, such as the rollover notice, are firmly established. Don’t go beyond them. I will let others address the substance of your question. That horse has been beaten to death long ago, notwithstanding never-ending attempts to keep riding it.

Some thoughts from a non attorney....You don't need to amend the tax return for an incorrect rollover amount. It has no bearing on taxation. Having funds in your IRA that are not "qualified" could jeopardize the tax status of the rest of the money in your IRA. If they file a suit and can prove your were overpaid, you will have to return the overpayment. If you hire an attorney, do so to ensure that the vesting they are telling you is correct is in fact correct and that there is no other reason why your vesting should have been calculated differently. Fighting the suit just because you don't think you should have to pay the money back would be a waste of $$. People ignore this kind of thing at thier own peril. If the amount is small enough, they may not see an advantage to filing a suit and trying to recover the funds. For $6000, i would not be surprised if they pursue this.