The Revenue Ruling states that the guidance equallyapplies to situations in which the participant chooses to not cashthe check, sends the check back to the payor, destroys the check,or cashes the check in a subsequent year. (Photo:Shutterstock)
Benefit plan administrators and plan service providers receivedIRS guidance on what to do when a participant in a tax-qualifiedretirement plan receives a plan distribution but does not cash thecheck or cashes the check in a later year. According to IRS RevenueRuling 2019-19, the distribution is:
- Includible in the participant's gross income for the year inwhich the distribution occurs
- Subject to applicable tax withholding by the plan administrator(or payor) when the distribution is made
- Reportable on Form 1099-R for the year of distribution by theplan administrator (or employer)
The Revenue Ruling states that the guidance equally applies tosituations in which the participant chooses to not cash the check,sends the check back to the payor, destroys the check, or cashesthe check in a subsequent year.
Plan administrators and plan service providers should reviewtheir uncashed check processing procedures to confirm that suchprocedures align with this guidance.
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