How to report IRA escheated to the state

[benefitsguru]

How do I characterize an IRA that has escheated to the state? Is it a disribution reported on a 1099? Is it simply a transfer of some sort? Any help would be greatly appreciated!

[My 2 cents]

How or why would an IRA be escheated to the state?

If it was escheated to the state, how could it possibly represent a distribution of any sort, let alone a distribution to be reported on a 1099? Surely an IRA escheated to the state could not possibly be an event taxable to the owner or the owner's estate, to whom the proceeds were not, after all, paid!

[benefitsguru]

If an IRA owner is beyond 70 1/2 and there hasn't been any activity in the account for a certain number of years, some states require the funds to be turned over to the state.

It just seems odd to me that we turn the funds over to the state without accounting for them with the IRS because there wasn't a 1099 filed nor were 5498s filed.

[Appleby]

Uniform Unclaimed Property Act provides guidelines for when IRAs must be escheated...usually when the IRA is considered 'abandoned' and the IRA Custodian has taken certain specific steps...

[Appleby]

The IRS has not provided any procedures for reporting escheated IRAs. It may be a good idea to issue a 1099-R, just as you would with a levy

[robbie]

My wife's Roth IRA at Schwab was escheated to the NYS Controllers office 2 weeks ago. We can get the money from the state with no problem, I think.

QUESTION?

Since the account still seems to be open, can we put the cash back in as a "60 day rollover"?

[My 2 cents]

Again, I cannot imagine what the IRS could do if a 1099-R was issued with respect to funds escheated to the state. Impossible that a taxable event could have occurred!

Is it not the case that when escheated IRA funds are restored to the individual, it can be done so as a direct IRA rollover? If not, why not?