IRS Issues Guidance on IRA Distributions to State Unclaimed Property Funds

The Internal Revenue Service has issued two new guidance documents on the transfer of individual retirement account funds into a state unclaimed property fund. In a revenue ruling, the IRS addressed the federal income tax withholding and reporting obligations that are imposed when IRA funds are transferred to a state unclaimed property fund.

A second piece of procedural guidance expands the list of permissible reasons for which a taxpayer may self-certify eligibility for a waiver of the 60-day rollover requirement to include transfers to a state unclaimed property fund. Bank IRA custodians and trustees are responsible for transferring IRA funds to state unclaimed property funds if the IRA is deemed “abandoned” or “unclaimed” under state law.