Under Act 95 of 2016 (H.B. 1605), which became effective last Saturday, inactive individual retirement accounts (IRAs) can escheat to the Pennsylvania Treasury even though the account owner is under age 70-1/2 and not required to take distributions.

Under the previous version of section 1301.8 of the Fiscal Code (Act of April 9, 1929, P.L. 343, No. 176), an individual retirement account or self-employed plan would be not be considered to be “abandoned and unclaimed” until at least three years after the owner has attained age 70-1/2, which is the age when mandatory distributions are required under the Internal Revenue Code and regulations.

Under the amended section 1301.8, an IRA will be considered to be “abandoned and unclaimed” three years after the holder has “lost contact” with the account owner, unless the account owner has begun taking distributions, increased or decreased the principal, received a payment of income or principal, or has “otherwise indicated an interest in the account or plan or in other property of the owner in  possession, custody or control of the holder.”

The “date on which the holder has lost contact with the owner” is defined by the statute and refers to dates when mail is returned undelivered.  And a new section 1301.10A imposes an obligation on holders of unclaimed property to send notices to the owners of the property before sending the unclaimed property to the state.

The new section 1301.8 also refers specifically to attorneys-in-fact as well as fiduciaries generally.

Act 95 is a general revision of the Fiscal Code that was enacted as part of the budget process, and the change to the unclaimed property rules seems to an attempt to increase the collection of abandoned or unclaimed property, which the state apparently considers to be a form of revenue.