401K DISTRIBUTION ERRORS

My sister received a hardship distribution to take care of her grandkids m, she is 60 yo. She has no funds left to repay, the plan administrator wants the overpayment repaid. She has no assets, car and rents, she lives in pa.she cant even handle a repayment plan. Please advise? should she just walk away? please advise.

thanks,

Dave222

Did the plan pay her more than her account?

I'm confused.

This is obviously not "legal" advice but I have never in my 40 year career had a former participant in this situation repay the overpayment.  This is the plan's problem.  Walk away.

We need more information, or possibly a better description of what happened in order to give you accurate advice.  

How much did she get?  How much was she supposed to get?  How much are demanding she repay?

Was it actually a loan?

Even though the Plan is legally required to try to get it back, there is a low expectation of repayment.  Walk away.  The request is basically CYA for the Plan itself,

Could there be some workplace retribution if she doesn't pay it back? 

(I know it's not allowed, but if she is still working there, the company could make it tough going.)