Minimum Required Distribution Rolloved Over Accidentally

A Balance Forward Profit Sharing Plan had an age 72+ non-owner Participant retire in late November 2022. The Participant Elected a Rollover to an IRA for the rollover eligible portion, and waived all tax withholding from the Minimum Required Distribution portion. Total Vested Account approximately $25,000, Minimum Required Distribution portion is approx $1,200, leaving approx $23,800 rollover eligible.

The Employer requested a single check from the Plan Account made payable to the IRA FBO the Participant for the entire Vested Account Balance. This check was issued in December 2022 and mailed to the IRA custodian. The 2022 Form 1099-R is not yet issued.

Question 1 A and B: Since the tax filing deadline has not come to pass and the 1099-Rs have not yet been issued, A. can the Plan issue two (2) 1099-Rs, one reporting a taxable distribution in the amount of $1,200 with zero taxes withheld (because they were waived by election) and distribution code 7, and, a second reporting the Rollover Eligible portion (approx $23,800) as a non-taxable amount, with rollover code G, while the Participant requests the $1,200 be removed from the IRA account? B. If completed before the tax filing deadline it may be removed with out penalty - correct?

To note, the Plan is a balance forward plan with a 1/31 plan year end. From the plan's perspective there is no interest adjustment necessary since all was paid prior to the last day of the Plan Year 1/31.

Question 2: Is a VCP filing required? If yes, is there a defense not to do so given the amount involved that would stand up to review, e.g. the User Fee exceeds the amount involved?

Question 3: if by chance the IRA custodian has yet to settle the check, could the Plan put a "stop payment" on it and have the checks reissued as elected by the Participant?

Thank you.

Yes I would issue 2 1099s and yes the participant should request a distribution from the IRA - but it is important to request it as a refund of an excess contribution, otherwise they will be taxed twice.

No VCP.

I doubt the check is uncashed and in any event wouldn't want to mess with blowing up an investment company's system with a bad check.

Thank you so much Bird!

29 minutes ago, Bird said:

Yes I would issue 2 1099s and yes the participant should request a distribution from the IRA - but it is important to request it as a refund of an excess contribution, otherwise they will be taxed twice.

Understood and thank you so much, Bird.