According to the Investment Company Institute, Americans have $5.68 trillion in Individual Retirement Accounts (IRAs). In a traditional IRA account, a person can make tax deductible contributions to an account that can grow over the years with no tax impact until distribution. Importantly, individuals must wait until age 59.5 to make withdrawals without a tax penalty (and individuals generally must begin taking distributions at age 70.5). In other words, an IRA is a prototypical long term investment. Depending upon the individual's age when he or she opens the plan, decades can go by before the money is touched, in fact, to avoid tax penalties, it is likely.
The unclaimed property laws account for the fact that long dormancy is expected. Pursuant to the 1995 Uniform Unclaimed Property Act, the dormancy period for IRAs and similar accounts does not begin to run until (1) the attempted distribution of assets or (2) the date that distribution must begin under the tax laws.
This position is sensible - the whole purpose of these accounts is to put the money away until retirement.
Pennsylvania, however, has recently amended its unclaimed property laws for IRAs. Under the new law (House Bill 1605) the dormancy period begins to run when two account statements are returned to the custodian as undeliverable. In other words, if a person moves, but forgets to tell his or her IRA custodian within the period of two account statements, the IRA account is on its way to being turned over to the Commonwealth.
It is unclear if there are any positive impacts from this change, but there certainly could be negative impacts. Under the former law, if a person moved without notifying his/her broker, their funds would not be escheated until the mandatory distribution date (therefore there is no adverse tax consequence). Now, if the same move happens, and the property is escheated, the account owner may suffer tax implications as a result of the "distribution" of his or her property to the Commonwealth.
Moreover, it wouldn't seem that delivering the property to the Commonwealth does not make it any more likely that it will be returned to the owner. If an individual remembers that he or she had a forgotten IRA account, he/she is more likely to remember (and contact) the broker rather than to contact the Commonwealth. Accordingly, other than simply bringing more money into Pennsylvania's treasury, the reasons for this change are not clear.