Distributions - paid out incorrectly...who makes plan whole?

[Guest Stacey Potts]

We are working with a plan that is employer-only money, profit sharing. When the profit sharing contribution for 2010 was made, it was allocated to the incorrect source, QNEC (vendor error). Consequently, there were participants who were paid out at 100% vesting due to the source, who were not 100% vested....to the tune of $8,000 to 17 participants. What is the correct way to go about making the plan whole again? Who's responsibility is it to try to notify participants and re-capture the funds? The vendor or the client or us as TPA? Any suggestions would be greatly appreciated!

[Spencer]

Ultimately, it is the employer's responsiility as plan sponsor, but I would certainly expect the vendor to correct their error, contact over-paid participants and attempt to re-capture and if that is unsuccessful, the vendor should make the plan whole. If vendor refuses, then the employer should make plan whole. And seek legal counsel.

[ESOP Guy]

Ultimately, it is the employer's responsiility as plan sponsor, but I would certainly expect the vendor to correct their error, contact over-paid participants and attempt to re-capture and if that is unsuccessful, the vendor should make the plan whole. If vendor refuses, then the employer should make plan whole. And seek legal counsel.

And a new vendor