IRS extends transition relief for escheated IRAs

Tax Hot Topics newsletterThe IRS issued Notice 2018-90 providing a one-year extension of relief previously provided in Rev. Rul. 2018 for complying with withholding and reporting requirements for payments from IRAs to state unclaimed property funds. Relief is now granted until Jan. 1, 2020.

Rev. Rul. 2018-17 involved an individual who did not make a withholding election with respect to her interest in an IRA. In 2018, pursuant to state law, the IRA trustee paid the individual’s interest in the IRA to the state’s unclaimed property fund. The question was whether this payment was subject to Section 3405 withholding requirements and Section 408 reporting requirements for the year in which it was made. The IRS concluded that it was, but gave IRA trustees and custodians until Jan. 1, 2019 to comply with those requirements. Notice 2018-90 extends that compliance deadline by one year to Jan. 1, 2020.

Brad Roe
Managing Director, Houston
T +1 832 476 5080

Tax professional standards statement
This content supports Grant Thornton LLP’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the topics presented herein, we encourage you to contact us or an independent tax professional to discuss their potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this content may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this content is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.

The information contained herein is general in nature and is based on authorities that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice provided by Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, the reader’s specific circumstances or needs and may require consideration of tax and nontax factors not described herein. Contact Grant Thornton LLP or other tax professionals prior to taking any action based upon this information. Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Grant Thornton LLP assumes no obligation to inform the reader of any such changes. All references to “Section,” “Sec.,” or “§” refer to the Internal Revenue Code of 1986, as amended.