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Why Can't They Leave Well-Enough Alone?

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The IRS has just gone and made our lives even more complicated. By “our” we mean the unclaimed property holder community, although consumers should also have their antenna up over this development as well, as it could result in an unfavorable tax imposition on assets originally intended to remain in place.

It is onerous enough to decipher the various and unique state codes governing the escheatment of these accounts, but now the administrative burden just got a bit heavier. Under recently released Revenue Ruling 2018-17, escheatment of an IRA is now considered a designated distribution includible in the account owner’s gross income for withholding purposes. Holders must now follow federal tax withholding and reporting rules upon reporting of an IRA as unclaimed property. Obviously non-compliance with this new ruling could expose the institution to additional penalties under the Internal Revenue Code as well, so extra measures should be taken to be build an effective compliance protocol around this issue.

JMS is presently advising clients affected by this Ruling and encourages all holders to stay tuned to the JMS Blog for more regulatory developments. Contact us with any questions you may have about escheat & unclaimed property.

IMPORTANT UPDATE TO THIS POST HERE

Tagged: revenue ruling 201817 ira escheat retirement account escheat irs escheat