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IRS extends transition relief for escheated IRAs

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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.

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Brad Roe
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