The Government Accountability Office (GAO) has issued a report requested by Senate Finance Committee Ranking Member Ron Wyden (D-OR) on issues related to the transfer of retirement savings to states as unclaimed property.

The GAO explains that its report examines "how much in retirement savings is transferred to states as unclaimed property and what happens to those savings once transferred" and oversight by the Internal Revenue Service (IRS) and Department of Labor (DOL) regarding the transfer of unclaimed retirement accounts to the states.

The GAO makes the following three recommendations for administrative improvements by the IRS and DOL on this issue:

• Recommendation: The IRS Commissioner should work with the Department of the Treasury to consider clarifying if transfers of unclaimed savings from employer-based plans (such as 401(k) plans) to states are distributions, what, if any, tax reporting and withholding requirements apply, and when they apply.
• Recommendation: The IRS Commissioner should work with the Department of the Treasury to consider adding retirement savings transferred to states from terminating DC plans to the list of permitted reasons for rolling over savings after the 60-day rollover period, in a form consistent with the rules adopted on the taxation of transfers of unclaimed retirement savings.
• Recommendation: The Secretary of Labor should specify the circumstances, if any, under which uncashed distribution checks from active plans can be transferred to the states.

The full text of the 59-page GAO report is posted here.

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