FIT submitted in error

[Guest GregSelf]

I’ve got a client who had involuntary cash-out distributions processed in calendar year (plan year) 1999. Several distributions were mailed to the last known addresses. FIT was submitted to the IRS by the plan’s recordkeeper (a bank). About 20 of these distributions were returned due to bad addresses. This happened after the plan year-end. The bank refuses to offer help to recover the submitted FIT, which the sponsor has now funded back to the plan out of pocket. Has anyone had experience with this? Any suggestions??? The sponsor is working with a major accounting firm currently. Any other ideas?

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[Guest]

It seems that the bank has a customer service problem. What does your contract with the bank say?

[Guest GregSelf]

Actually, there's been a change in the custodial/recordkeeping company. The bank no longer has the assets effective 12/31/99. They "politely" explained that they'd be able to help if we were still in the 1999 calendar year. Since we're not, they claim they can't. They also claim this is a standard banking policy.

I'm pretty sure whatever service contract existed between the bank and the client is now terminated.

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[Guest]

I guess the sponsor can write to the IRS directly. I don't know if the IRS would bother to refund it if these participants in fact had outstanding tax liabilities. Then the sponsor would have to get the money back from the participants, which would probably cost more than the actual amount of the refunds.