Utah Admin. Code R966-1-4 - Tax-Deferred Accounts

(1) Sections 67-4a-202 and 67-4a-203 of the Act states when "tax deferred" accounts are presumptively abandoned. Section 67-4a-202 prescribes the rules for tax deferred retirement accounts and Section 67-4a-203 prescribes the rules for other tax deferred accounts. These rules for tax deferred accounts generally have longer periods of abandonment than accounts covered by Section 67-4a-202 of the Act.

(2) A retirement account that is tax advantaged under the income-tax laws of the United States will generally be considered tax deferred under the Act. As an example, but not a limitation, a Roth IRA should be considered tax deferred under the Act and the rules under Section 67-4a-202 apply to a Roth IRA.

(3) In some cases federal law, specifically ERISA, 29 U.S.C. Section 1001 et seq., may preempt the Act and prevent reporting and remitting retirement accounts or other property representing a plan asset, that would otherwise be reportable under the Act. Non-qualified, government, and church plans are not subject to an ERISA preemption, nor are uncashed plan distribution checks issued by a qualified plan where the plan either lacks or has failed to exercise a forfeiture or other reversionary interest.

(4) If a holder is uncertain whether (i) an account qualifies as tax deferred under the Act, and therefore whether such account is covered by Section 67-4a-201 or by Sections 67-4a-202 or 67-4a-203, (ii) ERISA preempts the Act for a retirement account, (iii) whether an account is covered by Section 67-4a-202 or Section 67-4a-203, then the holder may specifically identify the property in a report filed with the administrator or give express notice to the administrator of a potential dispute regarding the property. Specifically identifying the property in a report or providing express notice to the administrator both ensures that such property will be covered by the limitations period of Section 67-4a-610 of the Act and demonstrates that the holder is attempting to comply with the Act in good faith and without negligence.

(5) Pursuant to Section 67-4a-405 of the Act, property reportable and payable or deliverable absent owner demand provision, and Section 67-4a-610(1) of the Act, anti-limitations provision,, a nonqualified plan or plan not otherwise subject to ERISA is prohibited from forfeiting an account or other property.

(6) Under Section 67-4a-202(1), an IRA is considered dormant three years after failed delivery of communications. If an IRA falls within this provision but the owner is under age 59.5, Utah Treasury asks that a due diligence mailing be made but that the property not be reported and remitted unless the owner's IRA remains in the same dormant status when he or she reaches age 59.5. This is to address the issue of a potential penalty associated with early IRA distributions.

(7)Under subsection 1(b) of the IRA provision, an IRA is considered dormant and subject to due diligence on the earlier of (i) attained age of 70.5 or (ii) two years after death. If either of triggers (i) or (ii) are met, the property is subject to due diligence. There is no additional returned mail requirement under these circumstances and returned mail on the customer IRA, or the lack thereof is not a factor in the dormancy analysis under section 1(b). Because of the "or" operator between subsection 1(a) and 1(b), if either of the dormancy triggers in 1(a) or 1(b) are met, due diligence is required, and if no response is received, the property must be reported and remitted.

Notes

Utah Admin. Code R966-1-4

Adopted by Utah State Bulletin Number 2020-05, effective 1/22/2020