Withholding, reporting of IRA payments | KPMG | GLOBAL
close
Share with your friends

Withholding, reporting of IRA payments to state’s unclaimed property funds

Withholding, reporting of IRA payments

The IRS today released an advance version of Rev. Rul. 2018-17 that addresses the withholding and reporting requirements with respect to payments made from IRAs (individual retirement accounts) to a state’s unclaimed property funds.

1000

Related content

Rev. Rul. 2018-17 [PDF 19 KB] provides that payments made by a trustee of an individual’s IRA to a state’s unclaimed property fund are subject to federal income tax withholding and reporting.

Summary

An individual had an interest in an IRA (a traditional IRA) but the individual failed to made a withholding election with respect to this interest in the IRA, and the applicable state law requires the IRA trustee to pay the individual’s interest in the IRA to the state’s unclaimed property fund under which a claim for property may be made by the owner. In 2018, the trustee paid over the individual’s interest in the IRA (a value of $1,000) to the state’s unclaimed property fund. 

The IRS in the revenue ruling concluded that the payment made by the trustee of the individual’s interest in the IRA to the state’s unclaimed property fund was subject to federal income tax withholding under section 3405 and also to reporting under section 408(i). 

Rev. Rul. 2018-17 allows certain transition relief. The IRS stated that a person will not be treated as failing to comply with the withholding and reporting requirements (described in the revenue ruling) with respect to payments made before the earlier of (1) January 1, 2019, or (2) the date it becomes reasonably practicable for the person to comply with those requirements.

<p>© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.KPMG International Cooperative (“KPMG International”) is a Swiss entity.</p> <p>Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.<br> </p>

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Request for proposal

 

Submit