IRS Clarifies Tax Treatment of Uncashed Retirement Plan Checks

On August 14, 2019, the IRS published Revenue Ruling 2019-19, clarifying the tax treatment of retirement plan distribution checks that are not cashed by the participant to which they are distributed. Specifically, the ruling discusses a fact pattern in which a participant receives a required distribution in 2019, but fails to cash that check by the end of the year.

In this situation, the IRS confirms that

  1. the distribution should be included in the employee's gross income for 2019;
  2. the employer should withhold taxes from the distribution in 2019; and
  3. the employer should report on the distribution in 2019, by providing the employee with a 2019 1099-R.

So even if an employee fails to cash a distribution check in the year that the distribution was made, the distribution is still deemed to be made in that year (for tax purposes). Employers should consider this guidance to ensure that they are following the correct protocol in distributing retirement plan funds and taxing those distributions.

Revenue Ruling 2019-19 »