Alien Beneficiary

[Below Ground]

We service a plan that is in a "border state". Participant wants to name mother (citizen of Mexico) who lives in Mexico as beneficiary. Are there any problems with this? Am I correct in saying that payments will be subject to 30% withholding if the death benefit is actually paid? Lastly, what should be used for beneficiary designation form that requires the beneficiary's social security number? Mother does not have a social security number, obviously.

[Peter Gulia]

A plan’s administrator might reconsider whether it really needs a taxpayer identification number as an element of naming a beneficiary. Some administrators request a TIN as part of a beneficiary designation - because doing so helps collect a record that might be needed later, and using the record might help support a way to reduce the probability of identity fraud. But a TIN isn’t strictly necessary until it’s time to pay or deliver a distribution.

If a plan’s administrator requires a number, the would-be beneficiary may use Form W-7 to apply for an individual taxpayer identification number or “ITIN”. An alien who’s about to receive a retirement plan’s distribution almost always can claim that he or she needs an ITIN to file a U.S. tax return or to claim. [see http://www.irs.gov/pub/irs-pdf/p1915.pdf]

[Peter Gulia]

Oops. ... or to claim a treaty benefit.

[Below Ground]

Thank you Peter! I could find nothing in my research.

[masteff]

Form W-8BEN would be another for future reference.

[Below Ground]

Thank you too!