Untitled Document

September 2025

Unclaimed Property Laws and IRAs, Including Inherited IRAs

An IRA custodian/trustee is required to remit unclaimed IRA funds to the proper state division or department when there has been no contact or activity by the IRA owner or beneficiary during the dormancy time period. This includes inherited IRA funds.

You must determine what is the dormancy time period applying to IRAs in your state. Many states have adopted a three (3) year period.

The concept applying to IRAs in most states - when does the IRA plan agreement require that a distribution be made to the IRA owner or the IRA beneficiary. The dormancy period commences on that date.

For example, an IRA owner who attains age 73 on August 1, 2025 has a required beginning date of April 1, 2026. That is when his or her 3-year dormancy period commences (starts to run). If the IRA owner attained age 73 on September 1, 2024, then his or her required beginning date was April 1, 2025 and that is when the 3-year dormancy period started to run.

The determination of the dormancy period for an IRA beneficiary is more complicated. It depends upon determining when must that beneficiary take their first distribution in order to comply with the RMD beneficiary rules.

Deadlines for Inherited IRAs
A determination must be made for the various beneficiary situations - what is the date when the beneficiary must take their first RMD?

Situation #1. The IRA owner died in 2022 before his or her required beginning date.
1. Certain beneficiaries must use the 5-year rule. The RMD deadline is 12/31/2027. The 3-year period commences on 1/1/2028.

2. Certain beneficiaries (non-EDB) must use the 10-year rule. The deadline is 12/31/2032. The 3-year period commences on 1/1/2033.

3. Certain non-spouse beneficiaries and spouse beneficiaries who are not the sole beneficiary but who are an EDB must commence their annual distributions by 12/31/2023. The 3-year period commences on 1/1/2024.

4. A spouse beneficiary who is the sole beneficiary is not required to commence distribution until December 31 of the year the deceased spouse would have attained age 73.

Situation #2. The IRA owner died in 2022 on or after his or her required beginning date.

This situation is where the IRS has proposed that a non-EDB must comply with annual distribution rule and the 10-year rule. This means a beneficiary must use the life distribution rule commencing on 12/31/2023. The 3-year period commences on 1/1/2024.

Situation #3, The IRA Owner Died Before January 1, 2020.
For each beneficiary you must determine when that beneficiary had to be distributed their first distribution from the inherited IRA. The dormancy period commences on such date.