Must a fiduciary provide a social security number?

[Belgarath]

We have nothing to do with plan investments, but I thought someone might know the answer to this. I have little information to go on other than that a client wants to open up new plan investments and/or investment options. the client says that the investment house(s) or brokerages, whatever, are telling him that the plan fiduciaries must provide their personal social security numbers, due to Dodd-Frank. (Mind you, this is what the client is saying - usually inaccurate in ost information they provide!)

Doe you know if this is true, or partially true, etc? Thanks!

[MoJo]

I've never had an investment house ask for SS numbers for an "institutional" account. Are they titling the account appropriately in the name of the trust?

[Belgarath]

Thanks MoJo - I know nothing more than what I posted. I'm going to tell them to ask the investment provider(s) to provide them appropriate citations, I was just curious if anyone knew if this was really a requirement.

Basically, I presume the investment house can make up any internal rules they want as long as not prohibited, so if the client doesn't like it, they can invest elsewhere!

[david rigby]

If the "investment house" is not familiar with institutional/qualified plans, keep moving.

[Bird]

They are probably taking steps to establish identity, as required by...I guess it is Dodd-Frank. The investment company has to take some steps to confirm that the account is not part of a money-laundering scheme, and/or the investor is not a terrorist. The broker is also supposed to show that the investments are "appropriate" and establishing identity is part of that process. (Of course none of this is relevant in a retirement plan situation but we can't let logic interfere with rules.)

I didn't pay enough attention in my continuing ed to tell you if a SS number is an absolute requirement, or just the first and most logical thing to ask for, but it's not an outrageous request IMO.

[K2retire]

Are they truly asking for the trustees' SSNs, or are they really asking for the SSNs of the participants? I've heard from employers who didn't want to provide participant SSNs, despite the need to issue 1099-Rs to those participants.

[david rigby]

Unless they make payments directly to participants, why would an investment house/brokerage EVER need SSN's of participants?

Perhaps they really want the EIN/PN for the plan?

[Belgarath]

Apparently, according to the usually unreliable information provided by the client, they are asking for the SSN's of all of the Trustees of the plan.

We told 'em to take this up with the investment provider(s) - if I hear anything concrete, I will post it here.

[Peter Gulia]

When a financial institution (including a broker-dealer or an investment company) designs its customer identification program, the program must include something to check the identity of the natural persons who act for a non-natural person (including a corporation, trust, or employee-benefit plan).

See 31 C.F.R. Parts 1020 to 1029 http://www.gpo.gov/fdsys/browse/collectionCfr.action?collectionCode=CFR&searchPath=Title+31%2FSubtitle+B%2FChapter+X&oldPath=Title+31%2FSubtitle+B%2FChapter+X&isCollapsed=true&selectedYearFrom=2012&ycord=1238

Even if not expressly specified in those rules, some programs call for a natural person's taxpayer identification number, which for a U.S. citizen is the Social Security Number.

Many request also a copy of an identity document that includes a photograph of the natural person's face. A strange use when one considers that almost never does an operations employee at the investment house see the face of the natural person.

Belgarath, if your client's natural persons do furnish Social Security Numbers, consider suggesting that they inquire about the institution's procedure for destroying the identity-checking records after the uses of them (including internal and external audits of the identity checker's work) are completed. Some financial institutions might not watch their employees and contractors closely enough to prevent, or even detect, identify theft by those employees or contractors.

[Belgarath]

Thanks!