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He isn't. Give it back, all of it, it is a mistake in fact.

I'd want to know - did this occur in two different plan years? If so, then the participant got credit for the taxes that were paid in to the IRS on his behalf. That amount (which would have been reflected on the 1099-R form) went toward his overall total tax debt. Even if the distribution occurred in the current plan year, the participant would still receive credit for those taxes paid into the IRS on his behalf so I would say that the participant would have provide 100% of the distribution amount back to the Plan.

Except the $10,000 de minimis benefit can’t be paid out as a lump sum.

C.B. Zeller, no problem for separate DC plans, but DB would run into 401(a)(26) if controlled group, right?

The distribution was paid to the participant and was presumably taxable. Why would the IRS refund the tax withholding?

Solo 401(k) is just a marketing term for a 401(k) plan that is supposed to cover just owner and spouse. Safe Harbor 401(k) is just a 401(k) with Safe Harbor provisions of either matching or non-elective contributions that meet certain conditions to get out of 401(k) testing and possibly top-heavy. Both are simply subsets of regular 401(k) Plans. There is no reason why the "Solo (k)" and be restated on to a different document and you could possibly restate it to a safe harbor 401(k) Plan for 2022 is they are OK with a non-elective safe harbor; the matching safe harbor you could not do until 2023 at this point.

Adopted by "1099-employee"'s employer? So, it is a MEP.