IRS addresses income tax withholding and reporting for uncashed checks

The IRS has issued Revenue Ruling 2025-15 as part of its long-running effort to address issues involving missing or unresponsive retirement plan participants and uncashed checks.

The ruling generally confirms:

• Income tax should be withheld and reported when a qualified plan issues a check even if this check is never cashed
• A plan administrator is not required to report or withhold tax with respect to a reissued check provided that the amount is equal to or less than the original check that went uncashed

If a replacement check is issued and the amount of the check exceeds the original check, additional reporting is only required if the new amount exceeds $10. The ruling does not address refunds of withheld taxes or tax implications for participants if the replacement check is less than the original due to, for example, investment losses. When both checks are issued in the same year, reporting may be combined on a single Form 1099-R. Although not specifically stated in the ruling, the guidance should also apply to 403(b) plans.

Authors

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Gary Chase

Director, RIC Technical Services, LifeSight U.S. Head of Compliance

email Email phone +1 212 309 3802

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Stephen Douglas

Senior Director, Retirement and Executive Compensation

email Email phone +1 203 326 6315

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