Funds overpaid in participant rollover returned to Plan. How is it reported?

A client plan delivered funds based on a terminated participant's rollover request. The payment included the participant's vested balance plus a $10,000 overpayment amount (a simple clerical error - check was written for $60,000 instead of $50,000). The error was caught within 30 days. Both the participant and receiving custodian were notified of the mistake. And the receiving custodian returned the $10,000 overpayment amount to the client plan in a timely manner.

Nothing has been reported yet.

Does the Form 1099-R reporting for the participant distribution need to include or otherwise address the $10,000 error in any way, since the participant received what was due and the original client plan was made whole?

Does the client plan need to report a plan failure?

Nope. Just have the 1099-R reflect the appropriate amount of 50k.

Agree - and assume this was a DBP, otherwise where did extra amount that was overpaid come from?

On 11/10/2022 at 2:19 PM, CuseFan said:

Agree - and assume this was a DBP, otherwise where did extra amount that was overpaid come from?

The distribution check was written by an employee of the sponsoring employer from their DC Plan's pooled account. And the refund was redeposited into the same account upon receipt.