Retirement plans compliance newsletter for August 2025

• Disaster Relief for Texas and New Mexico
  In response to various natural disasters, the IRS and PBGC extended certain deadlines for individuals and businesses impacted in Texas and New Mexico.
• Filing Relief for Natural Disasters Act
  Congress passed a new law that allows the IRS to grant relief for state-declared disasters and automatically extend certain deadlines for federally declared disasters.
• Uncashed and Replacement Check Withholding and Reporting Guidance
  The IRS issued tax withholding and reporting guidance regarding certain uncashed and replacement checks from a retirement plan.
• DOL PEP Guidance
  The DOL issued new PEP guidance and a request for information.

In response to severe storms and flooding, the Internal Revenue Service (IRS) and Pensions Benefit Guaranty Corporation (PBGC) extended certain deadlines for individuals and businesses impacted in Texas and New Mexico.

Impacted Areas and Dates

Individuals who reside or have a business in any of the following areas may be eligible for certain deadline relief:

Impacted Deadlines

Below is a partial list of retirement-impact tax filing and payment deadlines that may be extended:

• Retirement plan loan repayments may be temporarily paused under Internal Revenue Code section 72(p)(2)
• Required minimum distributions under Internal Revenue Code section 401(a)(9)
• The 10% additional income tax continues to not apply even if the following is missed during the relief period:
  • Substantially equal payments made over the participant’s life or joint lives of the participant and designated beneficiary
  • Deadline for using a distribution from an IRA for a first-time home purchase by the close of the 120th day after the distribution is received
• Prior tax year contribution deadlines for retirement plans
• Indirect rollover distribution deadlines
  • 60-day rollovers
  • Rollover of qualified loan offsets
• Refunds as a result of
  • Excess deferrals
  • ADP/ACP non-discrimination testing
  • Eligible automatic contribution arrangement (EACA) withdrawals
  • Excess IRA contributions
• Deadline for recontributing qualified reservist distributions
• Form 5500 and Form 8955-SSA filing
• Form 5948 for IRAs
• PBGC premium payments
• PBGC deadlines that are based on the Form 5500 deadline
• Single Employer Plan Termination Forms 500 and 501

The DOL neither endorses nor disapproves of plan fiduciaries who conclude that cryptocurrency is appropriate for the 401(k) investment lineup. Additionally, although cryptocurrency is specifically called out within CAR 2025-01, a footnote goes on to state that the same reasoning and principles may also apply to other “digital assets.”

More Information

For more information including the latest announcements, FAQs, and IRS disaster relief contact information, refer to the IRS’ tax relief website.

Congress passed the Filing Relief for Natural Disasters Act (H.R. 517) which allows the Internal Revenue Service (IRS) to grant state-declared disaster relief and automatically extend deadlines for federally declared disasters for certain deadlines. This applies to disaster declarations made after the law’s enactment.

IRS Authority

The IRS currently has authority to extend certain deadlines for areas of Federally declared disasters, significant fires, or terroristic or military actions. These deadlines may include, but are not limited to, Form 5500 filings, required minimum distributions, plan amendments, and certain plan loan repayments.

The new law would allow the IRS to also grant deadline extensions in the event of a qualified state disaster.

A qualified state disaster occurs when a state’s Governor officially declares a natural catastrophe to be a state disaster. This may include, but is not limited to, hurricanes, tornadoes, drought, or fires that cause significant damage to areas of the state.

Federally Declared Disaster Extension

Currently, federally declared disasters extend certain deadlines for 60 days. The new law would extend this period to 120 days. This applies to the following deadlines:

• Filing individual tax returns
• Making contributions to qualified retirement plans and IRAs
• Distributing excess IRA contributions
• Recharacterizing IRA contributions
• Completing 60-day rollovers

The Internal Revenue Service (IRS) issued Revenue Ruling 2025-15 (Guidance) to clarify how uncashed retirement plan distribution checks and replacement checks should be reported on tax Form 1099-R. The Guidance also confirms that uncashed checks are not subject to a refund if withholding was taken appropriately. Below is an overview of the Guidance.

Background

The IRS requires specific tax-withholding and reporting procedures for retirement plan distributions. The Guidance addressed scenarios where original distribution checks go uncashed and require reissuance and included the following example:

• Plan issues original check for full retirement benefit
• Plan applies correct tax withholding and IRS tax reporting
• Check remains uncashed for six months
• Plan cancels and returns check
• Plan issues second check for full retirement benefit

Original Retirement Check

When the original retirement benefit check is issued, specific reporting requirements must be followed. These requirements apply regardless of whether the check is cashed. Also, the Guidance confirmed that the tax withholding on uncashed checks is not eligible for a refund.

According to the 2024 Form 1099-R instructions, the following must be reported:

• Full distribution in Box 1 and Box 2a
• Federal tax withheld in Box 4

Second Retirement Check

For replacement checks, the reporting requirements vary depending on the amount of the new check compared to the original. If the second check is less than, equal to, or no more than $10 above the original amount, no additional action is needed.

However, different rules apply for replacement checks that are $10 or more than the original check. The following must be reported on Form 1099-R:

• Excess amount reported in Box 1 and Box 2a
• Federal tax withheld on excess amount reported in Box 4

The Guidance included only one example as outlined above. We will continue to monitor and provide additional updates if any future examples and guidance becomes available.