How do you Return/Refund Security Deposit after Second Year?

[Joseph Milano]

One of my tenants is coming up on their first lease renewal, so if they decide to stay, it will be the start of their second year. I currently hold 2 months of security deposit for them. 

I understand that after the second year you can only hold 1 month of the current rent as security, but I am curious how other landlords or property managers in Pennsylvania handle returning the other half? Do you return the money as a check as soon as they sign the lease, refund the last months rent for the following term, something else?

I appreciate any guidance anyone can provide.