Refusing to cash RMD checks because afraid of govt

[TPApril]

Intent is to avoid politics here. The situation goes back to 2018.

Missing participant who was not cashing RMD checks has been found and turns out was never missing, just doesn't want to cash a check for fear of being located by the government. Unknown whether participant is legal or illegal but there is an SSNO (Sorry I don't know details about all that). Yes 1099-R's are sent annually.

Just trying to be creative here on how to get them their money. One idea - has anyone ever managed to get cash from a Plan to give out the RMD rather than in check form?

Total account balance is < $20,000.  Total outstanding uncashed RMD's < $1,000.

[Bri]

Does the plan provide for forceouts after NRA?  That could eliminate future problems for the sponsor, at least.
 

(Still hoping someone suggests a sack of nickels with a big $ on the front, left on the guy's doorstep every December.)

[david rigby]

57 minutes ago, TPApril said:

Just trying to be creative here on how to get them their money.

In what way has the Plan failed to "get them their money"?  From your post, it appears the RMD has been paid and the 1099-R has been provided, but the participant has failed to cash the checks.  Is it the responsibility of the Plan or trustee to force a participant to cash the check?

Perhaps a gentle reminder that the cashing of a check is not what alerts "the government", but it's the filing of the 1099 form, and he/she has taxable income?

[RatherBeGolfing]

34 minutes ago, david rigby said:

Perhaps a gentle reminder that the cashing of a check is not what alerts "the government", but it's the filing of the 1099 form, and he/she has taxable income?

I'd also add that it was taxable when available to them; they can't escape that by not cashing the check (constructive receipt) 

[TPApril]

1 hour ago, david rigby said:

In what way has the Plan failed to "get them their money"?  From your post, it appears the RMD has been paid and the 1099-R has been provided, but the participant has failed to cash the checks.  Is it the responsibility of the Plan or trustee to force a participant to cash the check?

Perhaps a gentle reminder that the cashing of a check is not what alerts "the government", but it's the filing of the 1099 form, and he/she has taxable income?

The recordkeeper has put the money back into the plan in an Unallocated Account that we are now reconciling in addition to the plan's regular accounts. Preference is to get the participant out of the plan entirely.

[CuseFan]

2 hours ago, Bri said:

sack of nickels

Pennies! If you can find enough of them.

[Alan Simpson]

Some states have an unclaimed property fund.  Could you escheat the funds for the unclaimed checks to that?  Not the best option but it is a possibility.

[david rigby]

On 5/27/2026 at 1:17 PM, Alan Simpson said:

Some states have an unclaimed property fund.  Could you escheat the funds for the unclaimed checks to that?  Not the best option but it is a possibility.

Before doing that (he said, not knowing if such action is legit), one might try a gentler approach.  One might "suggest" to the participant that escheat might happen, thus making it even more difficult for him/her to get the money.  Such communication might be more effective if the PA enlists the assistance of some other party (sibling perhaps?) that is more effective in getting the point across.  Such communication will likely emphasize the above facts: (1) each payment has already been reported to the IRS, and (2) each payment is already taxable income (along with the corollary fact that the IRS "frowns upon" the avoidance of paying taxes and the avoidance of filing or declaring taxable income). 

Also, such gentle communication might suggest that the participant can get all of the (remaining) money via direct rollover to an IRA.  (Taxation might not change since the IRA must also do an RMD.)

[Peter Gulia]

TPApril, this might not answer your question aimed at what might be one way to appease a participant; but consider, if the plan’s trustee might be willing to pay in currency:

What place would the administrator tell the participant to go to? A bank lobby? If not, what are the security arrangements?

What steps would the plan’s administrator and trustee use to satisfy themselves, prudently, that a person who appears is the participant?

What compare-to documents does the administrator have to check that a person is the participant?

To the extent that the plan’s administrator uses the employer’s records, were all or some records destroyed after the employer’s records-retention period ended?

Who will do the work of identifying the participant? (Some might be unwilling to be in the participant’s presence.)

Will the plan’s trustee or administrator require the participant’s written receipt-and-release?

Will the plan’s trustee or administrator require that the participant sign, and acknowledge, the receipt-and-release in a notary’s presence?

How confident are the plan’s fiduciaries that a court would find that the receipt-and-release is sufficient evidence to prove that the distribution was paid.

Will a bank’s convenience fees, the notary’s fee and add-on convenience fees, and other expenses of arrangements to pay the participant in currency be charged against the participant’s account?

If the participant’s account balance is not paid in a single sum, are the plan’s fiduciaries ready to repeat the pay-in-currency arrangements every year?

These are only some of many questions.

[401k Conundrums]

Have you tried using PenChecks uncashed checks program?