incorrect payouts and plan is terminated

[Guest dubya]

Partner A and Partner B are the only participants in a plan. After a few years, the partnership dissolves and they go their separate ways. The Plan is terminated and distributions are made. It is discovered shortly after Partner A receives his payment (rolled to an IRA) that Partner A accidently got about $4,000 of Partner B's money. Partner A refuses to pay it back, because the tax consequence to him, as well as bad feelings toward former Partner B.

Since there is no employer remaining from whom to get any money from, and if Partner A refuses to pay back the $4,000, what is the correct next step in this matter.

Thanks

[david rigby]

In the U.S., anyone can sue anyone for any reason. But is it likely to succeed? Is it worth the cost of litigation? etc.

[Guest dubya]

Understood about filing a lawsuit. This is America, baby.

Normally the Plan Administrators is responsible for these problems. Since the Plan is gone and the company is gone, would you say that at this point, no one is really responsible to do anything about this? Granted Partner A can sue Partner B, but other than that, is there any obligation on someones part to pursue a solution here?

Thanks

[QDROphile]

Both Partner A and Partner B have an incentive to work this out. If plan monies were improperly distributed, the plan has an operational error that disqualifies it. So the money in each IRA is bad and they lose the deductions they took for the plan contributions. But who is going to threaten to report to the IRS and discover a bullet hole in his own foot?