Correcting impermissible distributions when bundled provider has chang

[Guest mo again]

I have a 401(k) plan where, during 2000, a number of employees were reported to the recordkeeper as terminated, when in fact they had only transferred to another division. About 100 of these actually took impermissible distributions. We are now trying to correct this.

Unfortunately the recordkeeper was changed (from one major bundled provider to another) as of January 1. The taxes were remitted and 1099-R's issued by the old recordkeeper. Needless to say, they refuse to have anything to do with the cleanup.

My two concerns are (1) getting back the withheld taxes remitted by the prior recordkeeper under their own tax ID number, assuming that the participant repays the portion he/she received; and (2) dealing with the 1099-R situation if the person repays. There may also be participant loans involved, and those will need to be dealt with on a case by case basis.

Does anyone have any suggestions as to how to deal with these issues?