Plan Sponsor Responsibilities Regarding Erroneous Distribution from 401(k) Plan (Posted September 12, 2005) Technical Tip 149: The following questions and answers were from the IRS Q&A Session at the 2004 ASPPA Annual Conference: Q. Suppose you have a 401(k) plan that fails ADP/ACP testing where the correction will be made by making distributions to the HCEs. Suppose you find this out after an HCE has already taken a complete termination distribution from the plan and it was directly rolled into an IRA or another plan. What is the plan’s responsibility? A: The plan must notify the participant. See 1.401(k)-1(f)(4)(i). Q. Does it need to contact the other plan or IRA? A. No. Q. Is it enough to notify the participant? A. Yes. Q. Do 1099’s need to be re-done with regard to the rollover? A. Yes, see the instructions to the 2004 1099R form. View all Tips © 2012 Reish Luftman Reicher & Cohen, a Professional Corporation Important notice: Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner's situation. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of your situation.