Hooray, the IRS has decided that IRA or 401k money turned over to state unclaimed property fund due to lack of activity is subject to withholding.
https://www.irs.gov/pub/irs-drop/rr-20-24.pdf
This may have the beneficial side effect of notifying the original owner, via the 1099-R, that they still have money sitting out there somewhere.
On the other hand, it does lessen the benefit of a related ruling, which says that money sent to state unclaimed property is a valid reason to self-certify a waiver of the 60-day rollover rule (in that the withheld money would have to be made up from somewhere else in order to successfully roll over the full amount).
https://www.irs.gov/pub/irs-drop/rp-20-46.pdf
https://www.irs.gov/pub/irs-drop/rr-20-24.pdf
This may have the beneficial side effect of notifying the original owner, via the 1099-R, that they still have money sitting out there somewhere.
On the other hand, it does lessen the benefit of a related ruling, which says that money sent to state unclaimed property is a valid reason to self-certify a waiver of the 60-day rollover rule (in that the withheld money would have to be made up from somewhere else in order to successfully roll over the full amount).
https://www.irs.gov/pub/irs-drop/rp-20-46.pdf