IRS clarifies withholding, reporting on uncashed pension checks 

A new IRS revenue ruling clarifies a retirement plan’s withholding and reporting obligations on uncashed distribution checks. The ruling is based on the following facts: A plan attempted full distribution by check of a participant’s $800 accrued benefit reduced for taxes, canceled the uncashed check after six months, and then mailed a new check for the same amount.

IRS ruled the following:

• The plan is not entitled to any adjustment or refund of the taxes withheld from the first distribution and remitted to the IRS. The plan must report the distribution on Form 1099-R for the year in which the plan attempted the first distribution.
• No withholding is required on the second distribution because there was no increase in the accrued benefit after the first distribution attempt (i.e., the amount of the second check didn’t exceed the first). If there had been a benefit increase, the plan would have to withhold tax on the increase and, if it equaled $10 or more, report it on Form 1099-R for the year of the second distribution attempt. 

The ruling addresses no other issues (e.g., the appropriateness of mailing the second check) aside from the plan’s withholding and reporting obligations.

• Rev. Rul. 2025-15 (IRS, July 16, 2025)