Participant without SSN

[Gilmore]

We have asked this question to the PBGC and have not received a response as of yet, so I was hoping someone may have had the same issue resolved.

We have a terminating DB plan with about 60 participants.  One participant was terminated earlier in the year by the plan sponsor after they determined that she was using false identification and a stolen SSN.  Her estimated payout in the plan term is approximately $1200.

She has not obtained a real SSN yet. 

What options does the plan sponsor have with respect to paying this participant her benefit?

Thanks very much.

[shERPA]

Participant needs to get a TIN.

https://www.irs.gov/individuals/international-taxpayers/us-taxpayer-identification-number-requirement

 

[Gilmore]

Understood.  What are the plan sponsor's options if the terminated participant refuses or does not act in a timely manner and needs to get the plan distributed?

Thanks.

[shERPA]

I imagine it would be the same as for any other participant who did not respond with properly completed election forms, they can be characterized as "missing", send the money to PBGC.

https://www.pbgc.gov/sites/default/files/form-mp100-instructions.pdf#page=4

Who counts as missing In general, a distributee is considered missing if, when the plan closes out, the plan doesn’t know the individual’s location (e.g., if a notice from the plan is returned as undeliverable). For purposes of these instructions, we use the term “Unlocatable” to describe a distributee in this situation.P 1F 2 P An individual is also considered missing if: • The individual’s benefit was subject to a mandatory cash-out under the plan’s terms and the individual did not return the necessary paperwork providing instructions about how the payment should be made (e.g., by check or as a direct rollover to an IRA); or • The individual did not accept a lump sum payment, whether elected voluntarily or subject to mandatory cash-out (see “Unaccepted lump sum payments” below). We use the term “Unresponsive” to describe a distributee in either of the two situations noted immediately above. Note that a distributee may be both “Unlocatable” and “Unresponsive.”  [emphasis added]

[Gilmore]

Got it.  Thanks.

[RatherBeGolfing]

16 hours ago, shERPA said:

I imagine it would be the same as for any other participant who did not respond with properly completed election forms, they can be characterized as "missing", send the money to PBGC.

https://www.pbgc.gov/sites/default/files/form-mp100-instructions.pdf#page=4

Who counts as missing In general, a distributee is considered missing if, when the plan closes out, the plan doesn’t know the individual’s location (e.g., if a notice from the plan is returned as undeliverable). For purposes of these instructions, we use the term “Unlocatable” to describe a distributee in this situation.P 1F 2 P An individual is also considered missing if: • The individual’s benefit was subject to a mandatory cash-out under the plan’s terms and the individual did not return the necessary paperwork providing instructions about how the payment should be made (e.g., by check or as a direct rollover to an IRA); or • The individual did not accept a lump sum payment, whether elected voluntarily or subject to mandatory cash-out (see “Unaccepted lump sum payments” below). We use the term “Unresponsive” to describe a distributee in either of the two situations noted immediately above. Note that a distributee may be both “Unlocatable” and “Unresponsive.”  [emphasis added]

I agree that this would make sense, but what if the participant is both missing and does not have a SSN?  The program addresses missing or unresponsive participants, but you still have to identify the participant.   If the participant is not cooperating, and you do not have a valid SSN or TIN, what do you do?  

[Gilmore]

We are following up again with the PBGC and will let you know if we receive a response.

[Gilmore]

PBGC responded and told us to call the IRS.

[JamesK]

5 hours ago, Gilmore said:

PBGC responded and told us to call the IRS.

Always helpful!  LOL!  Actually, TIN's do fall within the IRS's bailiwick.  Good luck!

[Gilmore]

The IRS told us to ask another TPA that may have run into a similar situation.  So I've come full circle.

[mstick]

Might be possible for the TPA to find an insurance co willing to take the defined benefit amount even without a SSN or TIN. Many old terminated DB contracts never had SSN or TIN for participants -- just names, id numbers and addresses. The insurance cos would then solicit full information from the participant. (Making it the insurance co problem rather than the plan admininstrator's or TPA's.)

[Kevin C]

We had this come up a couple of times recently in 401(k) plans.  The employees who were fired for using someone else's SSN were completely unresponsive to attempts to contact them about their distributions.  Both had less than $5,000 vested balances.  The auto rollover provider for the plans, Millennium Trust, said they can not accept funds for someone without a correct SSN.  The plans also contain a provision that forfeits the balances of missing participants who are due an involuntary distribution. Normally, the auto-rollover provisions would apply before the missing participant provision.  But, with an auto-rollover being impossible, the missing participant provision applied.  Both participants' balances were forfeited.  If they show up to claim their benefits and can prove they were the person who earned the benefits, the forfeited balance will be reinstated.  The plans also have a provision that if the missing participant has not been located by the time the plan terminates, the forfeiture becomes irrevocable.

If your document has a similar provision, it may help you resolve the situation.  If nothing else, it may convince the PBGC to make it their problem.

Good luck.

[Gilmore]

Thanks for the replies.  Will look into both.