Excess distribution and 1099?

[Dennis Povloski]

A distribution was processed based on incorrect vesting, and the participant received a little over $400 too much as a result. For various reasons, the employer will not try to get the money back from the participant. Instead, the employer will be making a contribution to the plan for the excess amount.

So the participant is keeping everything that she got. Is there any affect on her 1099 as a result of this since she got something she shouldn't have?

[Guest Sieve]

Yes. The excess is not eligible for rollover, and the employer ought so to inform her. I assume that means a revised (and/or additional) 1009-R must be issued.

[Dennis Povloski]

We did send out a letter informing the participant of the error, and amount not eligible for rollover.

Is there a special code on the 1099r that should identify the amount not eligible for rollover? I thumbed through the instructions, and didn't really see one that seemed to fit.