Penalties for not withholding

[Guest Suanne]

A participant requested a cash distribution from a plan, and the plan paid the full account balance to the participant, without withholding 20%. They have tried to get the money back from the participant, but have had no luck.

What penalties will apply, and what steps should now be taken? Should the client still send a Form 8109 now without a check for the withholding? Or should they wait until the end of the year and indicated the missed withholding on the Form 945?

[WDIK]

http://benefitslink.com/boards/index.php?showtopic=24850