Unclaimed Property Clearinghouse

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Unclaimed Property Clearinghouse
IRA BASICS
Presented by Lynden Lyman
TM
People Making Technology Work
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Source Internal Revenue Service
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U.S. Total IRA Market, 1990-2003 (billions of
dollars)
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p
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eestimated ppreliminary Sources Investment
Company Institute, Federal Reserve Board,
National Association of Government Defined
Contribution Administrators, American Council of
Life Insurers, and Internal Revenue Service
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Source Internal Revenue Service
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Age Distribution of Taxpayers with Traditional
IRAs, 1999
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1 Among the 36.6 million taxpayers with
Traditional IRAs. 2 Percent of taxpayers with
Traditional IRAs 3 Average and median age of
Traditional IRA owning taxpayers was 53
years. Source IRS tabulations of weighted
sample of taxpayers represented on IRS Form 5498
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Statutory Basics
26 U.S. Code 408 Individual Retirement
Arrangements (IRA) Individual retirement
account means a trust createdfor the exclusive
benefit of an individual for purposes of
accumulation of wealth, on a tax deferred basis,
to provide economic security in retirement. 29
U.S. Code 1003 Employee Retirement Income
Security Act (ERISA) Coverage of ERISA limited
to employee benefit plans established or
maintained by an employer or employee
organization (other than governmental or church
plans). IRAs are not covered by ERISA. 26 CFR
1.401 Required distributions The owner must
begin to take distributions not later than April
1 of the calendar year following the year in
which the owner reaches the age of 70½.
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Resolving Issues In Reporting Unclaimed
Retirement Assets
ERISA Non-Qualified
ERISA Qualified
Defined contribution plan distributions
IRA Accounts
Governmental or religious entity plan
distributions
Governmental or religious entity plan entitlements
Defined benefit plan distributions
IRA distributions
Non-qualified deferred compensation
Harder
Easier
Welfare (non-pension) distribution and
entitlements
Defined contribution plan entitlements
Defined benefit plan entitlements
Qualified deferred compensation
IRA includes individual retirement accounts,
individual retirement annuities, simplified
employee pensions, Keogh plans.
Defined contribution includes profit-sharing,
401(k), and money purchase pension plans.
Defined benefit includes pensions where
benefits are based on salary and longevity.
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State Unclaimed Property Legislation
1981 Uniform Act Section 12(b) expressly
addresses funds in an individual retirement
account or a retirement plan for self-employed
individuals, where distribution of all or part
of the funds has become mandatory. (5 year
abandonment period.) 1995 Uniform Act Section
2(a)(14) expressly addresses property in an
individual retirement account where property has
been distributed, distribution has been
attempted, distribution is mandated, or
non-distribution would result in a tax penalty.
(3 year abandonment period.) New York Approach
(Handbook for Reporters of Unclaimed Funds) IRA
becomes reportable in the year in which the owner
reaches age 70½.
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IRA Reporting Issues

• Tax issues
• Holder relief from liability
• Lost birthdates
• Lost owner addresses
• Unclaimed distributions v. unclaimed accounts
• IRAs held by third party non-custodians

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