There are two areas regarding rollovers to qualified plans (not IRA's) that I would like some opinions.

First, if "plan A" does a Direct Rollover to a former employee's new plan (plan b) and plan B turns out not to be qualified, what are the penalities (if any) to the Trustee of plan A?

Second, what types of steps are taken before a rollover such as this are made? Do you require a copy of an IRS determination letter? Simply a letter from the recipient plan stating that it is qualified? Or nothing at all?

Any input would be appreciated.

Look at Income Tax Regulations, section 1.401(a)(31)-1, Q&A 6. It says that the adminstrator can reasonably require that the recipient plan provide a statement that it will accept the direct rollover and that the plan is eligible to receive the rollover. If you have that statement from the receiving plan, it would seem that you would have no liability if something goes awry.

Hope this helps.