A bank account is generally classified as dormant after three to five years of no owner-initiated activity, with three years being the most common threshold across states. Before it gets there, the account usually spends about one to two years in an earlier “inactive” stage, when the bank flags it internally and may start charging fees. Once the dormancy period runs out, state law requires the bank to hand your money over to the state through a process called escheatment.
The exact timeline depends on where the account is held and what kind of account it is. Every state sets its own unclaimed property rules, and the dormancy period can differ for checking accounts, savings accounts, money orders, and unpaid wages.1U.S. Securities and Exchange Commission. Escheatment by Financial Institutions
Inactive Versus Dormant
The two labels are not interchangeable. Inactivity is the bank’s internal warning stage, triggered after roughly 12 to 24 months without owner contact. During this window the bank may begin charging dormancy fees and will typically try to reach you at your address on file.
Dormancy is the legal stage that starts the countdown to escheatment. For checking and savings accounts, that clock generally runs three to five years. When it expires and the bank’s outreach has failed, the remaining balance goes to the state.
What Keeps an Account Active
To keep the clock from starting, you have to do something that shows you know the account exists. The activity has to come from you, not from the bank’s own systems.
- Deposits or withdrawals you initiate, including ATM and in-branch transactions
- Transfers between linked accounts at your direction
- Signing in to the bank’s website or mobile app
- Calling, emailing, or responding to a letter from the bank
- Updating your address, phone number, or beneficiary designation
Automated events do not count. Interest posting to your savings account, a monthly maintenance fee being deducted, or a dividend being credited will not reset the clock. Neither will the bank mailing you a statement, since that only shows the bank is aware of the account, not that you are.
Some states recognize “related account activity,” meaning a deposit into your checking account can keep a linked savings account at the same bank active. Because this rule varies, the safer habit is to touch each account individually at least once a year.
Fees and Interest While the Account Sits
Many banks charge an inactivity or dormancy fee once the account is flagged. Those fees can quietly reduce the balance month after month. Under Regulation DD, banks have to disclose the amount and conditions of every fee that may apply to your account, including dormancy fees, when you open it.2eCFR. Part 1030 Truth in Savings (Regulation DD) Your original account agreement is the place to find the fee schedule.
One protection: even after an account is classified as inactive or dormant, the bank must continue paying interest on interest-bearing accounts. Regulation DD prohibits withholding interest simply because of the account’s dormancy status.2eCFR. Part 1030 Truth in Savings (Regulation DD) In practice, if the dormancy fee is larger than the monthly interest, the balance still shrinks.
The Notice You Should Watch For
Before turning your money over, banks are required to make a good-faith effort to reach you. Every state mandates this due diligence step.3U.S. Securities and Exchange Commission. Investor Bulletin: The Escheatment Process The standard method is a written notice sent to your last known address, warning that the account will be escheated unless you respond. Timing varies: some states require the notice 30 days before the deadline, others 60 to 90 days.
If the letter comes back undeliverable and no other contact succeeds, the account keeps moving toward escheatment on schedule. Keeping your address current at every institution, including ones you rarely use, is the single most effective thing you can do to avoid losing track of an account.
What Happens After Escheatment
When the dormancy period expires and outreach fails, the bank transfers your balance to the state’s unclaimed property program and closes the account.1U.S. Securities and Exchange Commission. Escheatment by Financial Institutions The state acts as custodian rather than owner. Under every version of the Uniform Unclaimed Property Act dating back to 1954, owners and their heirs can generally claim the property in perpetuity, though a small number of states impose time limits, so checking your state’s rules is worthwhile.3U.S. Securities and Exchange Commission. Investor Bulletin: The Escheatment Process
The state will generally not pay interest on the funds it held. Most states invest unclaimed property for public purposes and return only the original dollar amount when you file a claim. Inflation does the rest.
Getting the Money Back Before Escheatment
If the account is flagged as dormant but the funds are still at the bank, reactivating it is usually straightforward. Visit a branch or call customer service, verify your identity with a government-issued photo ID and Social Security number, and make a transaction — even a small deposit or withdrawal — to restart the activity clock. The bank may also ask you to sign a reactivation form and update your contact details.
Filing a Claim After Escheatment
Once the money is with the state, you have to file a claim through the state’s unclaimed property program.4USAGov. How to Find Unclaimed Money From the Government Search for your name on the state’s unclaimed property website. If you’ve lived in multiple states, check each one, since property is typically sent to the state where the bank is located or to the state of your last known address. MissingMoney.com lets you search multiple states at once for free. Legitimate state programs never charge to search.
Filing generally requires a government-issued photo ID, your Social Security number, and documentation linking you to the account, such as an old statement, a prior address that matches the one on file, or the account number. Some states pay claims within 30 days; others take 90 days or longer.
CDs and Retirement Accounts Follow Different Rules
Auto-Renewing CDs
A common misconception is that a CD’s automatic renewal resets the dormancy clock. In most states it does not. The clock starts from the first maturity date after you bought the CD, even if the CD keeps rolling over. Some states let the bank delay reporting until the next maturity date after the dormancy period expires, but the underlying inactivity has already been accumulating. Logging in or contacting the bank before maturity is the simplest way to prevent an escheatment.
Traditional and Roth IRAs
Retirement accounts carry a risk regular bank accounts don’t: taxes. When a custodian escheats a traditional IRA, the IRS treats the transfer as a taxable distribution. The custodian must withhold 10 percent of the balance for federal income tax and issue a Form 1099-R.5IRS. Revenue Ruling 2018-176Office of the Law Revision Counsel. 26 USC 3405 Special Rules for Pensions, Annuities, and Certain Other Deferred Compensation Because the account holder never requested the distribution, they may have no chance to elect out of withholding, and the full balance could land in gross income for that year. For owners under 59½, the 10 percent early withdrawal penalty may also apply, though the IRS has not explicitly addressed whether the involuntary nature of the escheatment qualifies for an exception. Roth IRA earnings face similar issues if the five-year holding requirement has not been met.
The dormancy trigger for IRAs often ties to required minimum distributions. Once a traditional IRA owner reaches age 73, the current RMD starting age through 2032, states generally begin the dormancy clock from the date distributions should have started.7IRS. 2025 Instructions for Forms 1099-R and 5498 For an inherited IRA, the clock may start from the date the original owner passed away. Staying current on required distributions is the simplest way to keep an IRA out of escheatment.
Claiming a Deceased Relative’s Account
Heirs can typically file for a dormant or escheated account belonging to someone who has died, but the process is more involved than a standard claim. You have to prove both that the deceased owned the money and that you are legally entitled to it. That usually means a certified copy of the death certificate, proof of ownership such as a matching address or old bank records, and evidence of your relationship to the owner.
For smaller amounts, many states let close family — a surviving spouse, children, parents, or siblings — file directly using a small estates affidavit and proof of kinship. For larger balances, with $1,000 as a common cutoff though thresholds vary, a court-appointed executor or administrator may need to submit the claim on behalf of the estate. Requirements differ by state, so contacting the unclaimed property office before filing can prevent a rejected claim.