Hardship - In Service Distributions

[Guest psgross]

We have a plan where a participant requested an in-service distribution, but the request was submitted on a hardship withdrawal form. Our recordkeepers processed the request as a hardship. The Plan Sponsor is now coming back to us stating that they submitted the request on the wrong form; that it is, indeed, an in-service distribution, which the plan allows. Our recordkeeping department is stating that it is too late to change the distribution, and our payment services group also does not want to change the tax reporting records. In order to make any changes, the recordkeeping/payment services groups want a letter from the plan sponsor's attorney absolving them from any ramifications this error causes. Is this a reasonable request?

[QDROphile]

It is absolutely reasonable to ask for reassurance that the service provider will suffer no adverse consequences from following an extraordinary order. If service providers did not inappropriately hold themselves out as advisors, they would not have to take such actions, but they do implicitly hold themselves out, so they have to cover themselves when it is clear that they are not taking responsibility.