You’ve probably heard a thing or two about unclaimed money or property. In fact, we’ve told you how to find it. If you forget about old assets (CDs, 401(k)s, or uncashed paychecks, for example) the government takes them until you reclaim them. This is meant to protect you, but some states will take over accounts when they’ve only been inactive for a few years.

Because of escheat laws, governments can transfer your “abandoned” money to the state until you or an heir claims them. In theory, these laws are designed to protect consumers; Forbes says the idea is that it’s safer for heirs to claim abandoned money or property when it’s held by the state. Plus, it keeps your accounts from being stuck in limbo.


The problem is, some states have started to take over these accounts when they’re not really abandoned. Forbes goes into a bit more detail and explains how this can be especially problematic with IRAs, in some cases:

Originally accounts were typically considered abandoned only if they went untouched for decades. But revenue-hungry states have been dramatically shortening that “dormancy” period...some states even subject individual retirement accounts to escheat once the IRA owner turns 70 1/2 and must take the required minimum distributions. And when an IRA is sent to the state, it may be taken out of its tax-deferred wrapper, making the whole balance immediately taxable.

Forbes reports that are twenty-seven states that take over assets after only three years, leaving some accountholders surprised to find their CDs, savings, and IRAs transferred to the state. In the above map, these states are colored in gold.


Of course, you can get your money back by filing a claim (which we’ve explained how to to do here). But some states will cash out your investments when the money is transferred, so you might have to pay taxes on that. A better solution is to avoid your accounts being transferred in the first place, and Forbes recommends a few ways to do this:

  • Consolidate your accounts to make them easier to keep track of.
  • Check in on CDs, IRAs, and other “set and forget” accounts regularly. Most states will consider checking an online balance as evidence the account is active.
  • Cash checks asap
  • Open all mail, even what seems to be a generic notice from the bank. Financial institutions are supposed to inform you in writing that your account is about to be transferred.


It’s an easy enough problem to avoid once you know about it. Forbes’ above map shows you which states transfer accounts after only three years of inactivity. So if you live in one of these states, you may want to look into the laws. And read more about it at the link below.

Banks Quick To Turn Over ‘Abandoned’ Assets To Revenue-Hungry States | Forbes

Photo: Forbes