Overpayment under a DC plan and 1099R requirements

I have a question on what if any amended 1099R is required in the event the plan issued a premature in-service distribution of the vested account and the participant rolled it over. The Trust will be expected to issue a 1099R with the coding for a direct rollover, however this was not an eligible rollover and the participant is being notified per EPCRS 2-8-52 Section 6.06 that the overpayment is not eligible for favorable tax treatment. Does the recordkeeper issue 2 1099R's with the first being the direct rollover and then the second one being a correction showing the full amount of the distribution as taxable? It was a 2018 distribution and the 1099R will be issued in January 2019 however the distsribution has been made and the 20% tax withholding was not taken. So I would think the recordkeeper should issue a corrected 1099R. The other option is for the recordkeeper to contact the IRA custodian, but that approach does not seem as clean. Has anyone worked on this before or received IRS direction?

Thanks!

I would read 6.06 as requiring only one 1099-R, showing the overpayment not eligible. It's up to the participant to correct the excess IRA contribution to avoid the excise tax on that. Can't see how any other reporting would make sense.

Ok so keep the 1099R coded based on the original distribution of a direct rollover to an eligible plan with no tax withholding?

30Rock, I thought I said the opposite, but maybe I'm not understanding you. I think you would only issue one 1099-R, you would show the entire amount as taxable, you would not withhold, and you would use Code E.