A 401(k) profit sharing plan participant received a RMD in 2003. There were several problems with this distribution. First, the plan contained vestages of a money purchase pension plan and the participant, although I'm certain that he never intended to take the annuity, never waived his right to receive a Qualified Annuity Benefit. However, the plan administrator did not purchase an annuity with the portion of the participants' plan account attributable to the money purchase plan. Second, the plan administrator has yet to prepare a 1099-R and did not withhold on the distribution. How would you correct these problems?

Are you saying that the minimum distribution amount was calculated under the annuity option and the annuity wasn't purchased or that the account balance method was used and the spousal consent wasn't obtained? It sounds like the latter, so pursuant to Rev. Proc. 2003-44, obtain spousal consent now.

If the 1099-R's were not prepared, the solution is to prepare them now.

As for tax withholding, the 20% is not required. The participant should have been given the option for any voluntary withholding.