The timing and application of your bank’s dormancy policy to certificates of deposit (CDs) and Individual Retirement Accounts (IRAs) is a decision for your institution. Of course, these types of accounts must be reported to the State Treasurer once they are deemed abandoned under the Uniform Disposition of Unclaimed Property Act [Repealed effective 1/1/18]. The specific provisions that apply to IRAs and CDs are described below.

General Rule under the Uniform Disposition of Unclaimed Property Act

Under the Act, the general rule is that an account held by a financial institution is not presumed abandoned until it has been inactive for five years. 765 ILCS 1025/2(a) [Repealed effective 1/1/18]. More specifically, an account will not be considered inactive if within five years the owner has: (1) increased or decreased the deposit amount, (2) corresponded with your institution in writing about the deposit, (3) indicated an interest in the deposit, as evidenced by a memorandum held in file by your institution, or (4) took any activities regarding other deposits or loan accounts held by the same owner at your institution (such as increasing or decreasing deposits, making loan payments, etc.). 765 ILCS 1025/2(a) [Repealed effective 1/1/18].

IRAs under the Uniform Disposition of Unclaimed Property Act

An additional test applies to an IRA before it is presumed abandoned: at least five years must have passed since the owner attained the mandatory distribution age (which is 70 ½ years old, as stated in this IRS FAQ). 765 ILCS 1025/2(e) [Repealed effective 1/1/18]. In practice, this means that the five year inactivity period would start running when the IRA owner reaches the IRA mandatory distribution age (70 ½).

CDs under the Uniform Disposition of Unclaimed Property Act

Specialized rules apply to CDs, which pose special problems because they can be automatically renewed indefinitely. CDs (and other non-deposit or savings accounts) are not presumed abandoned until at least five years have passed after the “final maturity date” for the account. 765 ILCS 1025/2(e) [Repealed effective 1/1/18]. For accounts that automatically roll over on their maturity date, the law clarifies that the “final maturity date” is the CD’s second maturity date — or the maturity date after the account is extended for the first time by an “additional like period.” Illinois regulations define “additional like period” as “one extension or rollover with the date of the expiration of the extension or rollover period becoming the final maturity date for the deposit.” 74 Ill. Adm. Code 760.200.

Because the term “additional like period” applies only to the first rollover of a CD, the five-year inactivity period (after which the CD will be deemed abandoned) begins to run after the maturity date of that first rollover or renewal. For example, if a customer opens a five-year certificate of deposit account in Year 1, and the bank automatically renews the account for another five-year term in Year 6, then the inactivity period would not begin to run until Year 11 (the final maturity date of the renewal). Assuming there is no customer contact or activity on the account at any time, the CD would be presumed abandoned in Year 16.

Also, we note that we were able to confirm this requirement with the State Treasurer’s office. Contact information for the Unclaimed Property Division is below. By using the options below, you will be connected to one of several staff members handling questions about reporting unclaimed property:

State Treasurer’s Office Unclaimed Property Division: (217) 785-6998

First, hit Option 2 — Business entities that wish to report property to the Unclaimed Property Division

Second, hit Option 1 — For assistance with reporting