Distribution Without Social Security Number

[Randy Watson]

We have a missing participant and an invalid social security number. The participant was apparently in the country illegally. Although "illegal", he was entitled to participate and accrue a benefit. I don't see any alternative other than to treat the participant as a missing participant. That doesn't do much good when you don't have a valid SSN. So do we just maintain the account indefinitely? How would we ever be able to make a distribution without a SSN? I believe all of the distribution options available to a DC plan on termination would require a SSN (e.g., rollover IRA, state unclaimed property etc...).

What do we do?

[Guest Robin.Wolf]

Is the balance greater or lesser than $5,000?

We have a missing participant and an invalid social security number. The participant was apparently in the country illegally. Although "illegal", he was entitled to participate and accrue a benefit. I don't see any alternative other than to treat the participant as a missing participant. That doesn't do much good when you don't have a valid SSN. So do we just maintain the account indefinitely? How would we ever be able to make a distribution without a SSN? I believe all of the distribution options available to a DC plan on termination would require a SSN (e.g., rollover IRA, state unclaimed property etc...).

What do we do?

[Randy Watson]

It's over the plan's cash out limit. So it looks like we have to hold the benefit indefinitely. But even on termination, how do we deal with not having a valid SSN? Does the PBGC missing participant program require SSNs? If not, any idea whether the PBGC's missing participant program for defined contribution plans will require it?

Are the relevant agencies even addressing benefits of illegals?

[K2retire]

Does anyone have a more recent solution to this situation?

I have a participant who was illegally brought into the country as a child and just recently learned of his illegal status and that the SSN he's been using is not valid. He has quit his job and returned to Mexico. Both he and the employer want to do the right thing with his profit sharing account, but we're all unsure what that is.

[masteff]

K2 - in your case, he's not missing. Off the top of my head, he can get a taxpayer ID number even though he's a "foreigner" and the account can be "corrected" to that TIN. I'm not aware of any law that would make him forfeit the account (but am not up-to-date on the subject and won't get offended if anyone has better knowledge to share).

[Belgarath]

I agree with Masteff. In general, going from memory of the last time when I had to look into this, the participant should be able to apply for an ITIN on a form W-7. And then I believe the withholding will be at 30%, absent some special arrangements based upon the tax treaty between the U.S. and Mexico. Personally, I'd just withhold at 30%. I think IRS Publication 515 may be of use, and if you actually do get into the tax treaty aspect, Pub. 901.

[K2retire]

To further confuse the issue, a colleague asked a DOL agent. She said that because the person was without a green card and therefore inelligble to work in this country, he never met the eligibility requirements and all employer money should be forfeited. Has anyone ever heard that concept before.

[Belgarath]

I'd ask the DOL agent to:

(a) put it in writing, and

(b) provide citations to support the position

Then I'd ignore the DOL agent anyway.

[david rigby]

To further confuse the issue, a colleague asked a DOL agent. She said that because the person was without a green card and therefore inelligble to work in this country, he never met the eligibility requirements and all employer money should be forfeited. Has anyone ever heard that concept before.

There are a few prior discussion threads related to this topic. You can use the Search feature, possibly with a search word such as "illegal".

But read Post #10 in this one:

http://benefitslink.com/boards/index.php?showtopic=40702

[K2retire]

David, I remember that post from the original discussion. That's why I found the DOL agent's position so surprizing.