Los Angeles partner Fred Reish was quoted in a ThinkAdvisor article titled “More IRS Guidance Needed on Unclaimed 401(k) Savings: GAO.” The article discusses a recent report by the Government Accountability Office (GAO) that advises the IRS to issue guidance to clarify the tax treatment of unclaimed 401(k) plan savings that have been transferred to states. The report also stresses that states need to push for greater efforts to find the owners of these funds.

Fred noted that the GAO report covers not only unclaimed IRAs but uncashed checks. “If there isn’t any activity with regard to an IRA for a period of years, and perhaps the IRA trustee (e.g., a bank) can’t locate the IRA owner, the money escheats to the state,” Fred said.

Regarding uncashed checks, Fred explained that “plans send out checks as requested distributions, forced distributions of less than $1,000, and minimum required distributions. In some cases, those checks are never cashed. After a period of time, the check will escheat to the state as unclaimed property. Both of those happen more than you would think.”

Source: ThinkAdvisor