Correcting "Restricted Employee" Distribution Error

We have a DB plan that inadvertently paid a lump sum to a "restricted employee" (i.e. one of highest 25 paid) without first meeting the conditions of Rev Rul 92-76 (eg putting money in escrow, pledging additional property, securing a letter of credit). Any ideas what an acceptable correction method would be? 

Short of clawing it back, I don't think there is anything you can do to "fix" it, but you could take action to mitigate the issues.

Is if possible to make a contribution so that the plan is 110% funded?  

Would they sign a letter of credit now.

You could pressure them to assist with some correction by threating to report is as an improper distribution that was not eligible for rollover.

Agree - either get the distribution back, contribute enough to make the plan 110% funded, or satisfy one of the other exceptions (which I have actually rarely seen in practice).

Very helpful - thanks!