Skip to main content

EB Flash: IRS Issues Revenue Ruling 2019-19 Providing Clarification on Treatment of Uncashed Distribution Checks

Employee Benefits Alert

The Internal Revenue Service (IRS) today issued Revenue Ruling 2019-19, which provides clarification on the tax treatment of uncashed distribution checks from qualified retirement plans. Generally, the ruling confirms that the participant or beneficiary recipient of the distribution ("recipient") is required to include the taxable portion of a qualified plan distribution in gross income in the year of distribution, even if the recipient fails to cash the check. Moreover, the plan is required to withhold and remit payment of federal income taxes and provide the Form 1099-R to the recipient. The recipient's failure to cash the distribution check does not change these obligations.

It's noteworthy that the ruling is based on the assumption that the participant received and could have cashed the check, stating that "whether [the individual] keeps the check, sends it back, destroys it, or cashes it in a subsequent year is irrelevant" for purposes of the ruling.

The ruling further points out that "[t]he Department of the Treasury and the Internal Revenue Service continue to analyze issues that arise in other situations involving uncashed checks from eligible retirement plans described in ยง 402(c)(8)(B), including situations involving missing individuals with benefits under those plans." This final point is important, particularly with respect to missing (or potentially missing) participants, as this represents the bulk of difficult uncashed check issues that plans face.

Revenue Ruling 2019-19 is set for publication in Internal Revenue Bulletin 2019-36, dated September 3, 2019. 

The five-page text of the ruling is posted here.

 



The information contained in this communication is not intended as legal advice or as an opinion on specific facts. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. For more information, please contact one of the senders or your existing Miller & Chevalier lawyer contact. The invitation to contact the firm and its lawyers is not to be construed as a solicitation for legal work. Any new lawyer-client relationship will be confirmed in writing.

This, and related communications, are protected by copyright laws and treaties. You may make a single copy for personal use. You may make copies for others, but not for commercial purposes. If you give a copy to anyone else, it must be in its original, unmodified form, and must include all attributions of authorship, copyright notices, and republication notices. Except as described above, it is unlawful to copy, republish, redistribute, and/or alter this presentation without prior written consent of the copyright holder.