Uncashed checks are a common source of headaches for retirement plan administrators. On July 16, the IRS issued Revenue Ruling 2025-15, which builds on prior IRS guidance, Revenue Ruling 2019-19, by addressing certain withholding and reporting obligations when distribution checks remain uncashed, are cancelled, and are subsequently reissued. While Revenue Ruling 2025-15 provides useful guidance, the uncashed check problem often involves complex facts and circumstances, so it will not be a cure-all for plans.
The Facts
Revenue Ruling 2025-15 addresses the following (rather common) fact pattern:
- Step 1: A qualified retirement plan with no designated Roth accounts makes a distribution and withholds federal income tax in the amount required under Code Section 3405.1
- Step 2: The amount of federal income tax withheld is remitted to the Treasury Department. The plan mails a check for the remaining amount of the distribution to the participant.
- Step 3: The participant fails to cash the check.
- Step 4: The check remains uncashed (in this case, for six months) and is cancelled, and a second check is later reissued to the same recipient.
The Findings
In Revenue Ruling 2019-19, the IRS confirmed that, under the facts set forth in Steps 1-3, the individual's failure to cash the distribution check does not alter the plan's federal income tax withholding or Form 1099-R reporting obligations.2 Revenue Ruling 2025-15 further addresses the tax withholding and Form 1099-R reporting obligations, taking into account Step 4, as follows:
First Check – Withholding and Reporting Obligations
The withholding rules generally allow an employer or withholding agent, that deducts or pays to the Treasury Department more than the correct amount of tax, to make an adjustment (e.g., offset against future withholding obligations) or receive a refund of the excess amount. Here, Revenue Ruling 2025-15 provides that no adjustment or refund is permitted where the first check remains uncashed, even if cancelled, because the amount withheld and paid to the Treasury Department was the correct amount under the applicable withholding rules.
Revenue Ruling 2025-15 also confirms that the Form 1099-R reporting requirements with respect to the first check are not altered merely because the check is cancelled, returned as undeliverable, or remains uncashed for any other reason.
GROOM INSIGHT: The inability to adjust or receive a refund of federal income tax withholding is inconsistent with the approach that the PBGC has taken in its Missing Participant Program.3
Second Check – Withholding and Reporting Obligations
In some cases, a plan may later issue (or reissue) a second distribution check to the person who did not cash the first check. If the amount of the second check is not more than first (and a proper Form 1099-R was issued with respect to the first check), Revenue Ruling 2025-15 provides that no federal income tax withholding is required when the second check is issued, and no corresponding Form 1099-R reporting is required.
If, however, the amount of the second check is more than the first (e.g., because of investment earnings), the additional amount is subject to federal income tax withholding and Form 1099-R reporting (if the additional amount is $10 or more).
GROOM INSIGHT: Plans will need to determine if the potential "incremental" withholding and Form 1099-R reporting requirements for second checks are subject to any limitations period or, instead, require tracking of prior uncashed checks indefinitely.
Questions and Complexities Remain
Revenue Ruling 2025-15 gives plans further certainty with respect to withholding and reporting obligations for uncashed retirement plan checks, but questions and complexities remain. For example, there are unique considerations where the distributions include after-tax or Roth amounts, or where the distribution is issued as a direct rollover to another eligible retirement plan or IRA.
The IRS further reminds plans that Revenue Ruling 2025-15 does not address the appropriateness of mailing a check to an address on file that the plan administrator believes is incorrect, or where the second check is issued to anyone other than the recipient of the first check (for example, where the proceeds of a participant's uncashed check are paid to a surviving beneficiary). Nor does the guidance address the coordination of withholding and reporting in situations where the liability for an uncashed check is transferred to another payee, such as an insurance company or the PBGC.
Footnotes
1. Consistent with Revenue Ruling 2019-19, Revenue Ruling 2025-15 assumes that the participant (or other recipient) has not made a withholding election under Code Section 3405 and has no investment in the contract under Code Section 72. Revenue Ruling 2025-15 further assumes the plan has no employer securities, designated Roth accounts, or other features with unique tax considerations.
2. The facts in Revenue Ruling 2019-19 assumed that the individual received and could cash the distribution check, which is difficult to ascertain. Revenue Ruling 2025-15 does not assume these facts.
3. Under the PBGC's Missing Participants Program, the PBGC requires that the sponsor transfer the gross amount of any uncashed checks to the PBGC without any reduction for tax withholding, even if the tax withholding has been remitted. In Revenue Ruling 2025-15, the IRS notes that the PBGC has said it is considering possible modifications to its Missing Participants Program regarding the treatment of prior tax withholding in connection with the transfer of benefits to the program.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
