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Unclaimed Property Focus
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UNCLAIMED PROPERTY FOCUS is a blog written by and for UPPO members, featuring diverse perspectives and insights from unclaimed property practitioners across the U.S. and Canada. We welcome your submissions to Unclaimed Property Focus. Please contact Tim Dressen via tim@uppo.org with any questions about submitting a blog post for consideration and refer to our editorial guidelines when writing your blog post. Disclaimer: Information and/or comments to this blog is not intended as a substitute for legal advice on compliance or reporting requirements.

 

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Federal SECURE Act Affects Unclaimed Retirement Accounts

Posted By Administration, Thursday, January 23, 2020

Included in a federal appropriations act signed into law in December 2019 and effective on Jan. 1, 2020, the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 makes several changes related to tax-advantaged retirement accounts. Some of these changes affect the treatment of such accounts as unclaimed property.

 

Among the changes is a shift in the age at which retirement plan participants must take required minimum distributions (RMDs). For anyone not reaching the age of 701/2 by the end of 2019, the RMD age shifts from 701/2 to 72. This change is noteworthy because unclaimed property holders use the RMD age to calculate dormancy for retirement accounts.   

 

Under the SECURE Act change, unclaimed property holders need to consider when the account owner turned 701/– before or after Dec. 31, 2019. However, while some state unclaimed property statutes refer to the RMD age without specifying what that age is, others specifically refer to 701/2. Until such states revise their statutes, their laws conflict with the new federal law, which may cause confusion over proper treatment of such accounts.

 

The SECURE Act also eliminates the 701/2 maximum age for deduction of IRA contributions. This change may encourage IRA owners to contribute to their plans later in life, reducing the number of accounts that become abandoned due to lack of activity or contact with the holder. 

 

Holders may also see a reduction in inactive IRAs from a change affecting IRA distribution upon the account owner’s death. Under the act, inherited IRAs must be fully distributed within 10 years of the owner’s death with exceptions for certain qualifying beneficiaries, including spouses and minors. 

 

IRAs have been a hot topic in the unclaimed property world in recent months. In addition to the SECURE Act changes, the Internal Revenue Service’s Revenue Ruling 2018-17 became effective on Jan. 1, 2020. This clarification from the IRS affects tax withholdings from IRAs and how such withholdings should be reported to the states. NAUPA recently provided guidance to help holders with this change.  

 

These changes will likely be among the topics attendees discuss during the Banking and FinTech Industry Focus session and Industry Breakouts at the upcoming UPPO Annual Conference in Tucson, Arizona. Learn more and register by Jan. 27, 2020, for the best rate. 

Tags:  IRAs  SECURE Act 

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UPPO Advocacy Update: June 2019

Posted By Administration, Thursday, June 6, 2019
Updated: Thursday, June 6, 2019

To help members remain aware of UPPO’s advocacy activities, the Unclaimed Property Focus blog presents the recurring Advocacy Update when legislatures are active or significant advocacy activity has occurred. Following are recent activities and trends from UPPO’s Government Relations and Advocacy Committee (GRAC).

 

Most state legislatures have recessed or adjourned for the year, so the number of active unclaimed property bills has decreased. States are likely to continue introducing new RUUPA-inspired bills when legislatures reconvene next year. 

 

As mentioned in recent advocacy updates, many such bills include provisions related to contingency auditors, earlier liquidation of securities and subpoena rights. 

 

The expansion of state subpoena power is especially concerning. Providing appropriate data to states as part of the unclaimed property reporting process is essential. However, some data requests and subpoenas are overly broad, presenting privacy concerns for consumers and the holders with which they do business. In some cases, data turned over to states that should be protected may be made public if the state doesn’t exclude private information from Freedom of Information Act (FOIA) responses. UPPO will continue to oppose such legislation and encourages holders to challenge overly broad information requests and subpoenas.

 

During the legislative recess, GRAC and the Holders Coalition will continue to work on federal issues, including the Internal Revenue Service’s position on individual retirement account escheatment, the tax treatment of unclaimed 401(k) accounts highlighted by the recent GAO report, and the SECURE Act. GRAC also continues its work promoting introduction of a voluntary disclosure program in California

 

As more and more legislatures and regulatory agencies take on issues affecting unclaimed property compliance, advocacy has become an increasingly important role for UPPO.

Please take a few minutes to complete our 
Government Relations and Advocacy Survey to help us build our grassroots network. Responses will give us the ability to mobilize UPPO members when we are faced with legislative and regulatory challenges and opportunities.

 

 

Tags:  California  GAO  IRS  retirement accounts  SECURE Act  subpoena 

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