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I can't get past that sentence. Outside of of insurance agents is there a person who is a 1099 "employee" that is an actual employee? Exactly, what kind of 1099 are they getting and how are they employees if they are getting a 1099? As a general rule they are not employees but independent contractors. An employee gets a W-2 and an independent contractor gets a 1099. If this is the insurance agent fact pattern that is an important fact as they have special rules.

No early distribution tax on distributions pursuant to QDRO. The AP is trying to receive a distribution in a form that appears to be unavailable under the plan, although the original poster has not provided adequate information about plan terms; this is all about plan terms.

Given that no one can point to clear guidance raises the question if a "right" answer is knowable or even exits. Note I only commented on the 5500 treatment. I think your answer on the tax treatment was spot on. By all accounts this person had Constructive Receipt of the check so it was taxable in year of issue. That is a very clear rule in tax law and easy to follow in many cases. On the other hand the people who wrote the instructions for the Form 5500 clearly never even bothered to think of such real life issues as asked about here. They don't even bother to read Benefitslink.com on a regular basis to see ways they could issue better guidance as I am willing to bet if someone did a search of this website one would find dozens of instances this exact question has come up. (My guess is some of them have me telling the person it is immaterial do what seems reasonable also.) That has been my view on many issues in this field. For all the rules it is amazing how many real life ideas never bother to get addressed. Still waiting for guidance on what "de minimus" means for purposes of 414(s) testing since I first learned the test in the early '90s. This website is a testament of what I am talking about. There are people who come here who have decades of experience and yet regularly they find situations that long debates happen over what is the right answer with no clear conclusion. I stand by my basic view too many people spend too much time worrying about the minutiae of the Form 5500 when it is clear neither the IRS nor the DOL care. I can't tell you how many audits I have helped a client with and never once have they asked the question, "how are checks issues but not cashed shown on the Form 5500?" If it is material I will give it some thought by asking the CPA if they have any thoughts but a $150 check sorry it has taken me longer to reply to you then I will every think about it.