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Showing results for tags 'mandatory withholding'.
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A participant received a lump sum distribution and the employer deducted 20% mandatory withholding. Over a year later, the administrator discovered the distribution should not have occurred. I believe the participant should repay the distribution amount, and the employer should file for a refund of the erroneously withheld amount using Form 941c and 843 (per the IRS's letter on recovery of erroneous withholding (https://www.pbgc.gov/prac/terminations/missing-participants/irs-letter-on-recovery-of-erroneous-withholding). Does this correction seem appropriate? Thanks in advance.
