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.
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
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
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.