Common use of Required Federal Income Tax Withholding On Escheated Accounts Clause in Contracts

Required Federal Income Tax Withholding On Escheated Accounts. Effective January 1, 2021, for any Account that becomes dormant and subject to escheatment under state unclaimed property law, the Internal Revenue Service requires reporting of the amount escheated on IRS Form 1099R, and income tax withholding at the time of escheatment to the state. You agree and authorize the Custodian to liquidate sufficient assets in your Account to provide for the withholding to the IRS. The Custodian will remit withholding to the IRS in accordance with any prior withholding election. If you have not made a prior withholding election, the Custodian will remit withholding at a rate of twenty percent (20%).