Roth IRA sent to abandoned property

Submitted by Don Hutson on Wed, 2022-01-19 03:14

Client held a Roth IRA at the bank. The bank indicated there was no contact for two years so they sent the Roth IRA account to abandoned property in the state of Washington. The date of the transfer to the state was October 15th. Client was informed the when funds were sent to the state, the funds were deemed distributed from the Roth IRA. client has not yet recovered the funds from the state. He is past the 60 day period to do a rollover. Any path to getting the funds back into a Roth IRA? Amount is approximately $215,000.

thank you



Submitted by Dan Zaehring on Wed, 2022-01-19 04:41

Washington State Unclaimed property has a procedure for correcting erroneous submissions.  You don’t indicate why the client was non-responsive, but the bank is required to mail letters to the owner prior to turning the funds over to the State.  Unless there are other circumstances, I would recommend pressuring the bank to apply for a return of the funds sent in error.  The funds should, upon their return, remain as qualified IRA monies.

Submitted by David Mertz on Wed, 2022-01-19 06:18

If the funds cannot be returned as an erroneous transfer, thus negating the distribution and resulting in a corrected Form 1099-R showing that there was no distribution, self-certification that this would qualify for waiver of the 60-day rollover deadline is possible.  Under IRS Revenue Procedure 2020-46, that the distribution was made to a state unclaimed property fund is an acceptable reason to allow self-certification.  Given the circumstances, the bank should accept this self-certification and permit the rollover back into the IRA.  However, being a distribution and rollover, this rollover would still subject to the one-rollover-per-12-months limitation.

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