My son left an employer in 2016 with a small (<$500) balance in a retirement plan. He was sent a check that year for the balance (from which 20% federal tax was withheld according to transaction details we found on the retirement plan's website), but he moved before the check was received and never cashed it. He never received the associated 1099-R, and we did not account for the distribution nor the tax withheld on his 2016 tax return. In 2020, he received a check from a third party for the original distribution amount (minus the 20% federal withholding taxes), less $50 (assumed to be a fee). He cashed that check in 2020.
Do I need to file an amended 2016 tax form to account for the distribution, or do I include it in 2020 taxes since that is when he actually received/cashed the check? I read somewhere that uncashed distribution checks may have corrected 1099-R's submitted to the IRS by the plan administrator to show no distribution. If I include the distribution in his 2020 taxes, how do I account for the federal tax withheld in 2016, and do I add the $50 fee back into the distribution amount or just use the net check amount?
