Undocumented Immigrant

[Guest BED]

A five year employee was stopped for speeding. The police determined that the name and SSN belonged to a man in the penitentiary. The employee turned out to be an undocumented immigrant who was using the convict's name and SSN. Employee is being held in custody. The Feds are prosecuting many of these persons now for illegal entry before deporting them. I doubt if there will be any way this person can apply for a SSN (I think one has to apply in person at a Social Security Office) or a TIN. When the employer originally checked the name and SSN, they turned up as valid.

I have advised the employer that the 1099 for the 401(k) distribution should have the employee's CORRECT name and that it should leave the SSN/TIN block blank if the employee does not have one. It should attach an explanation when it files the 1099 with the government and then send the explanation again when the Service sends a proposed penalty letter for an incomplete 1099. Withholding would be at the normal rate.

Does anyone have any different ideas.

[masteff]

See 1099-R instructions, page 11, "Failure to provide TIN". http://www.irs.gov/pub/irs-pdf/i1099r.pdf

You should also review IRS Form W-8BEN to determine if you need to w/hold 30% on a payment to a foreign person.

[Peter Gulia]

Did the participant submit a claim for a distribution grounded on his severance from employment? If so, what taxpayer identification number did the claimant certify on his claim form?

If the participant's account was credited with a few years' contributions, is the account balance small enough that the plan compels an involuntary distribution without the participant's consent?

That some police believe that an arrestee or detainee used identification that was not his is not necessarily conclusive evidence for a retirement plan's administrator's findings (if any is needed).

If a distribution, whether requested or involuntary, has become payable, what steps would a plan administrator use to collect evidence toward an evaluation of whether a name or taxpayer identification number certified to the administrator is false?

One imagines that the name, TIN, and photograph or description were internally consistent when the employer processed the I-9 form. If a pending claim has no information that is inconsistent with the I-9 information, how would the retirement plan's administrator decide which information (if any) is false?

The General Instruction about omitting a TIN if the payee did not furnish a TIN might be helpful. But the payer/reporter might consider getting its lawyer's advice about whether it is appropriate to conculde that the payee did not furnish a TIN.

Moreover, if the plan's administrator also is the employer, it might want its lawyer's advice to consider its alternatives for tax-reporting the distribution in light of how the information relates to duties under other laws.