Hey Gang

I was just wondering if anyone has experienced a state audit on abandoned property. I understand they go back 15 years. Also, how is anyone reporting abandoned IRAs on IRS 1099R reporting? And handling out of state property such as New York? Are you advertising in local New York properties yourself?

In New Jersey, it is my understanding that on IRA's as long as the statements are being sent to the customer and not being returned as undeliverable, they are not considered abandoned. It is also my understanding that out of state property would be handled according to that states abandoned property laws. You would need to look up New York abandoned property laws and escheat the property to the State of New York according to their schedule.

I have received returned mail IRA statements for over 70.5 ers. I will need to escheat IRAs this year. Here's the rub -- I contacted the IRS and they stated no one has ever asked this question before. Interestingly enough, Pub 590 addresses IRA funds turned over to State as a result of an insolvent bank. In this case funds are transfered to the State and are taxable to the participant. One would think the IRS would maintain this logic but they don't.

IRS actually replied that I need to speak to my tax accountant. Assuming I "transfer" the funds - then no reporting will occur. However, I am not turning money over to an IRA custodian or IRA trustee. I doubt strongly if someone comes forward to claim the IRA funds that the State would take the responsibility of federal reporting. If I "rollover" the funds then I could potentially be creating a taxable event for the participant who might not be a very happy camper.

Me thinks this topic should be asked on a national level to see how out of state banks handle this if it applies to them.