The IRS recently published a new Revenue Ruling 2018-17 regarding escheated IRA’s, with an effective date of January 1, 2019.
This ruling now requires holders to withhold federal income tax at the 10% rate for “nonperiodic distributions” on escheated traditional IRA accounts turned over to the states. It also requires the IRA trustee to report the escheated IRA distribution to the IRS on Form 1099-R.
This ruling does not apply to IRA owners who elected to opt out of their withholding according to IRA rules.
Follow the link to the official ruling by IRS: https://www.irs.gov/pub/irs-drop/rr-18-17.pdf
Need assistance in updating your policies and procedures to reflect the Revenue’s Ruling for any escheatment that occurs in 2020 and later? Contact the experts at UPCR for a free consultation.