If she does receive a 1099R, why not report it and then use a negative other income amount to back it off?  Then add a nice statement to the return (that probably won't get read by the IRS on the first pass) saying the 1099R was generated but the taxpayer never received the funds due to some scumbag.  If there is anyone deserving to get COVID and suffer a long and painful death from it, I think these are the people.