auditor

No tax withholdings; direct rollover from trustee to trustee for both pre-tax and roth amounts

Currently working on an audit for a 2022 plan year(calendar year) wherein it was recently discovered during our audit that a participant's deferrals were withheld but contributed to an incorrect participant's account due to a SSN error on the deferral upload. The participant who did not receive their deferrals was only with the company for a short amount of time (3 months) and is no longer in the Plan. Additionally, the participant who incorrectly received the funds has since distributed their funds out of the plan due to the fact that the plan is currently in the process of terminating. Because of this we presented the client with the options of either: 1) reaching out to the participant who incorrectly received the funds and request that they distribute that money out of their account due to the error, or 2) the trustees of the terminating plan fund the participant themselves in order to make them whole. Plan management was able to reach out to the individual who incorrectly received the funds and they have agreed to return the funds back. We are now trying to figure out how this process would work in regards to having the funds distributed from the incorrect individuals new 401k, as well as how to get the funds back to the correct individual through the self correction program, as opposed to the VCP. Is this possible? Any help would be greatly appreciated.