When you say the company "overpaid" you initially, what do you mean? If you over contributed to your 401k initially, then rolled it over, then took out the over payment, then it IS taxable. The money that went in was never taxed and it should be. Had you not rolled it over, you would have received a 1099-R from the company's 401k to remove the overage. See if Fidelity will re-issue their 1099-R with one of the penalty exception code for a Corrective Distribution. They will probably need a letter from the company stating such.
