Compensation is generally subject to federal income tax and FICA tax when compensation is actually paid to an employee. However, nonqualified deferred compensation (NQDC) may be subject to FICA taxation before federal income taxation under a FICA tax special timing rule. The scope of NQDC subject to FICA taxation is broad, including voluntary deferrals of
Tax Reporting
IRS Clarifies that Failure to Cash Checks Does Not Affect Withholding or Reporting
By Seth Safra & Tyler Forni on
Revenue Ruling 2025‑15 (available here) provides guidance on withholding and reporting obligations when a plan participant or beneficiary fails to cash a distribution check and a replacement check is issued. As discussed below, the guidance is consistent with general constructive receipt principles.
First Check Issued to a Plan Participant or Beneficiary
When a qualified…