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My mom's broker convinced her to rollover her 403b to his company. I wasn't in favor of this but didn't have any time to advise her on what she should do instead.

The company screwed up -- the rollover took place on the day dividends were due to be paid. They transferred the funds over to the new broker, and then paid the dividend. Only problem is the account didn't exist any more. So they sent the dividend check to my mom, which she cashed. They sent her a 1099 reporting the dividends as income.

In my understanding, though, this is an unqualified withdrawal from the retirement plan, and she also owes a 10% penalty. Is that correct?

Is there any way this can be corrected? Whose responsibility is it to correct it?
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