IRA Escheatment Guidance Transition Period Extended
The IRS released Notice 2018-90, extending the transition period originally named in Revenue Ruling 2018-17 to January 1, 2020. Revenue Ruling 2018-17 addressed withholding and reporting requirements with respect to the payment of an IRA owner’s interest to a state unclaimed property fund—an action sometimes referred to as “escheatment.”
The ruling states that payments made in this manner are treated as includable in gross income and, therefore, are subject to withholding upon distribution. In addition, the distributing financial organization must report these payments on the applicable year’s Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., identifying the IRA owner as the recipient.
The revenue ruling required financial organizations to comply with the requirement by the earlier of January 1, 2019, or the date it becomes reasonably practicable to comply with the requirements. Notice 2018-90 extends this period to January 1, 2020, or the date it becomes reasonably practicable to comply with the requirements.
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