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Try looking at DOL FAB 2006-01. Pages 8 and 9... DOL says "it might be appropriate for a plan fiduciary to not accept the settlement distribution". We had this situation a few years ago. They sent the checks back... interestingly 4 checks for about $1,400. Never heard anything after that. fab2006-1.pdf

What @Lou S.says. This was a much bigger deal BITD when we had to send hard copies. I've always liked to maintain good working relationships with other TPAs, so I will cooperate and email unless there are outstanding fees.

If the receiver is a Qualified Termination Administrator, then they have fiduciary protection against any breaches that occurred prior to their becoming QTA under the final abandoned plan regulations. The former shareholders, to the extent that they failed to execute their fiduciary duties, would still be liable.

Thanks Effen - just spoke with PBGC counsel who indicated Partial Termination does not apply to Multi's. I was surprised.

I think they apply all the more to a one-participant plan, because that is where there would be the most potential for abusing the plan as a temporary "piggy bank."

The participant is misunderstanding what the IRS is saying. Not surprising, since it is kind of a subtle distinction. This means that the employer is not required to look into the employee's personal finances - bank statements, investment accounts, credit cards, etc. to see if they have some other means available to them to satisfy the hardship. It does not mean that the employee is not required to substantiate the existence of the hardship. The IRS has this page about hardship substantiation: https://www.irs.gov/retirement-plans/its-up-to-plan-sponsors-to-track-loans-hardship-distributions Although summary substantiation is permitted, the plan administrator is well within their rights to use the traditional substantiation method. The participant has to comply with the plan administrator's procedures if they want to request a hardship withdrawal from the plan.

This is my prime gripe with EPCRS's correction of this issue. It leaves zero responsibility to the participant. I ask for 5% of my pay taken out, and then nothing happens. Free money baby! I'm almost hoping my ER messes up...