Idea Of The Day ^®

When employees leave a company and their retirement plan account is below $7,000 (or an amount set by the plan), there can be a mandatory cash-out. Doing this saves administrative costs for the plan. The IRS has guidance for employers regarding retirement plan distribution checks that have been mailed but are uncashed. Employers must still report the distribution on Form 1099-R, even if the check is returned as undeliverable (perhaps the former employee can’t be located). If an uncashed check is canceled and a replacement check is issued, a second Form 1099-R isn’t needed, assuming the amount of the distribution is the same (i.e., no additional earning accrued to the former employee). #IdeaoftheDay

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