How to distribute deceased part's acct. to beneficiary in BWI

[Kathy]

Hi all,

We have a participant that recently passed away. Beneficiary designation form indicates that part of account is to go to two relatives in BWI. Do we look to the tax treaty with UK? Can you give me a "quick and dirty" explanation of what I need to do to get the money out of the plan and to the benes? (If it wasn't hurricane season in what seems to be one of the worst seasons ever, I'd deliver the money myself!!)

Thanks,

Kathy

[Kathy]

40 Views and no answers yet... just thought I could move it back up the list... Still hoping for some guidance as to how to get started on this one...

[Appleby]

Since BWI is a dependent area of the UK, and the islands in the BWI are not listed separately in the treaty list ( at least in Pub 515) it appears you would need to apply the UK rules, which are:

You must withhold 10 percent federal tax, unless the beneficiary chooses to waive the federal tax withholding, at which point you apply the UK treaty rate ,under the NRA withholding rules, which is zero. If the beneficiary waives the federal withholding, he/she must provide you with a completed and signed Form W-8BEN Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding.

See IRS Pub 515 http://www.irs.gov/pub/irs-pdf/p515.pdf

If the beneficiary waived federal withholding and is therefore subject to NRA withholding, the distribution is reported on Form 1042-s , not Form 1099-R

If the beneficiary is unable to obtain a SS#, he/she should apply for an ITIN- you need this for your reporting purposes. See http://www.irs.gov/individuals/article/0,,id=96287,00.html

[Kathy]

Wow, Thank you! This is very helpful!