Illegal Aliens

[dmwe]

We try to do some due diligence prior to distribution by looking participants up on LexusNexus and we're running into a situation on a construction company plan where the SSN of the participant does not match up to the name or address we find on LexusNexus. I most cases these are "force outs" of small balances and we're not sure we have a good address either.

Where do we go from there? We don't really want to issue a taxable distribution under that SSN and cause the wrong person to be taxed on a distribution they never receive. I was planning on just forfeiting these small balances if the name doesn't match up to the SSN. I don't think the plan document addresses false IDs.

[Guest Sieve]

Is it possible that the individual you are finding is not the individual you really are looking for, and that the proper individual is still out there somewhere? Can your doubts be alleviated by using the IRS locator service (which will confirm both name & SSN)?

[dmwe]

Doubtful.

[Peter Gulia]

Has the plan's administrator asked the employer whether the name, TIN, and other identifying information presented for the potential distribution is consistent with the information presented for Form I-9 and on Form W-2 for the years that contributions were made?

Also, consider that a database might report one or more addresses with little or no background information on who reported the address or how it was associated with a name or TIN. Likewise, the IRS and other government agencies receive submissions in which a filer reported an address other than the subject's correct address (or a name other than the subject's name).

[mbozek]

We try to do some due diligence prior to distribution by looking participants up on LexusNexus and we're running into a situation on a construction company plan where the SSN of the participant does not match up to the name or address we find on LexusNexus. I most cases these are "force outs" of small balances and we're not sure we have a good address either.

Where do we go from there? We don't really want to issue a taxable distribution under that SSN and cause the wrong person to be taxed on a distribution they never receive. I was planning on just forfeiting these small balances if the name doesn't match up to the SSN. I don't think the plan document addresses false IDs.

The plan administrator can only pay benefits to a participant if the admin has the correct identity that matches a SSN. If there is a discrepancy then the benefits must be withheld untit the correct information is provided. Under IRS regs benefits due can be forefeited if the plan permits such forfeiture because the participant's whereabouts cannot be located.

[dmwe]

This is a construction company and summer workers and I'm assuming that they are falsely documented workers.

[mbozek]

This is a construction company and summer workers and I'm assuming that they are falsely documented workers.

Plan cannot pay benefits if it is aware that the identity is false or the SSN is incorrect.