Google Answers Logo
View Question
 
Q: Is beneficiary's SSN a legal requirement for a Roth IRA? ( No Answer,   12 Comments )
Question  
Subject: Is beneficiary's SSN a legal requirement for a Roth IRA?
Category: Business and Money > Finance
Asked by: rambler-ga
List Price: $12.00
Posted: 11 Jun 2005 13:49 PDT
Expires: 16 Jun 2005 20:11 PDT
Question ID: 532253
I've been trying to change the beneficiary on my Roth IRA and my 401K
(both are managed by the same financial company). The company demands
to know the beneficiary's date of birth and Social Security Number. I
do not have that information, and I refuse to ask someone for their
Social. (To me, that would be an unnecessary invasion of privacy.)

The financial company has refused to change my beneficiary designation
without that information.

So, my question is this:  Is it a legal requirement?  Does the IRS
demand that all financial companies record the date of birth and the
SSN of all beneficiaries of Roth IRAs and 401Ks?
Answer  
There is no answer at this time.

Comments  
Subject: Re: Is beneficiary's SSN a legal requirement for a Roth IRA?
From: pinkfreud-ga on 11 Jun 2005 14:20 PDT
 
I don't think it's the IRS that requires this. Several sources say
that this is being done in order to comply with Section 326 of the USA
Patriot Act.
Subject: Re: Is beneficiary's SSN a legal requirement for a Roth IRA?
From: rambler-ga on 11 Jun 2005 15:29 PDT
 
Doesn't Section 326 of the USA Patriot Act deal with the
identification of customers?  The customer is ME: the money in both
the 401K and the Roth IRA belongs to me, the owner. Any beneficiary
that I designate is surely NOT a customer (well, not until I die). Am
I right?

Can anyone tell me categorically that the Patriot Act requires that
the date of birth and SSN of beneficiaries be obtained and recorded? 
(Because, if that's true, then I give up: I'll just ask my cousin for
her SSN and to hell with her right to privacy.)
Subject: Re: Is beneficiary's SSN a legal requirement for a Roth IRA?
From: pinkfreud-ga on 11 Jun 2005 15:35 PDT
 
For what it's worth, the American Bar Association agrees with you
about the beneficiary not being a "customer":

"Because fiduciary accounts often involve numerous beneficiaries, many
of whom do not currently receive a stream of income, trust bankers
have raised questions concerning just who are the 'customers' whose
identities must be verified. ABA believes that only those
beneficiaries that actually receive income from a fiduciary account
should be deemed to be 'customers' under the proposal...

ABA believes that for purposes of personal trust activities, the
'customers' whose identities must be verified are the person or entity
that created the trust, typically the settlor, and current
beneficiaries. However, beneficiaries that do not currently receive a
stream of income, such as contingent beneficiaries, unborn children
and remaindermen, should not be deemed to be 'customers' until such
time as they begin receiving income."

http://www.aba.com/NR/rdonlyres/
DC65CE12-B1C7-11D4-AB4A-00508B95258D/26145/Section32998.pdf
Subject: Re: Is beneficiary's SSN a legal requirement for a Roth IRA?
From: financeeco-ga on 12 Jun 2005 08:10 PDT
 
I think they require it to avoid any ambiguity regarding the
beneficiary's identity if you get hit by a truck. I'm sure there have
been big, expensive lawsuits when John Smith Jr. and John Smith Sr.
living at the same address try to claim they're entitled to inherit
money granted to John Smith.

It's probably Fidelity doing a CYA procedure, but I doubt you'll be
able to get around it.
Subject: Re: Is beneficiary's SSN a legal requirement for a Roth IRA?
From: rambler-ga on 12 Jun 2005 13:18 PDT
 
I could move my money to a different financial institution -- one that
isn't so CYA-obsessed.
Subject: Re: Is beneficiary's SSN a legal requirement for a Roth IRA?
From: financeeco-ga on 12 Jun 2005 19:40 PDT
 
Addendum: when they distribute your money upon your untimely demise,
they have to report it to your estate AND to the IRS, b/c that
inheritance is taxable. So that's probably why they need an SSN. If
the money is ever distributed, by law they must have an SSN, so they
just want to get the data upfront.
Subject: Re: Is beneficiary's SSN a legal requirement for a Roth IRA?
From: elwtee-ga on 12 Jun 2005 20:03 PDT
 
i think you might find this a non-negotiable item. first because even
if it isn't a legal requirement i can't think of a provider that
doesn't ask for the information. doesn't mean there aren't any or
plenty, i just haven't seen one in a long time. after that while i
don't think you will find specific code language that just says, you
have to have the social security number of your beneficiary, i do
think the providers are engaging a few sections of code in
establishing their right to the information. for example the section
quoted directly below is internal revenue code TITLE 26, Subtitle F,
CHAPTER 61, Subchapter B, Sec. 6109. the quote is from section a
(supplying of identifying numbers) item 3.

"Furnishing number of another person 
Any person required under the authority of this title to make a
return, statement, or other document with respect to another person
shall request from such other person, and shall include in any such
return, statement, or other document, such identifying number as may
be prescribed for securing proper identification of such other
person."

further down in 6109, in section b (limitations) item d is the following language.

"Use of social security account number 
The social security account number issued to an individual for
purposes of section 205(c)(2)(A) of the Social Security Act shall,
except as shall otherwise be specified under regulations of the
Secretary, be used as the identifying number for such individual for
purposes of this title."

so that's my first best guess for authority. if that's not it or not
all of it, it is still seems unlikely that the authority doesn't
exist.

final thought, i don't see where obtaining information from someone
who you have just designated as financial beneficiary of your assets
is any kind of invasion of privacy. i suggest two things. one, if they
are offended at the thought of being the recipient of assets i suppose
they can say so and refuse to take the offer and refuse to give you
their identifying number. two, if you just don't want to know, i'll
bet you can arrange with the provider to have the beneficiary submit
the date and social number directly to them and not disclose it to
you.
Subject: Re: Is beneficiary's SSN a legal requirement for a Roth IRA?
From: myoarin-ga on 13 Jun 2005 05:39 PDT
 
?!?!?!?

Is it possible to get the SSN from the SS Service?  Or some other source?
I can very well understand that Rambler-ga may wish not to explain to
his niece why he wants the information.  Her birthdate should not be a
problem.

?????
Myoarin
Subject: Re: Is beneficiary's SSN a legal requirement for a Roth IRA?
From: rambler-ga on 13 Jun 2005 06:08 PDT
 
To elwtee-ga:


(a) You said, "i can't think of a provider that doesn't ask for the information."

I have NEVER been asked for that info before. Why now? I suspect that Pinkfreud
is right: it's because of the Patriot Act.


(b) You said, "i don't think you will find specific code language that
just says, you have to have the social security number of your
beneficiary".

Exactly! Not even the Patriot Act contains such specific language. I suspect
that financeeco-ga is correct: the company is doing a CYA procedure.


(c) You said, "i don't see where obtaining information from someone
who you have just designated as financial beneficiary of your assets
is any kind of invasion of privacy."

I felt terrible even asking my cousin for her SSN.  When she gave it
to me, this is what she wrote: "I'll give you my date of birth and
social. Just be sure it's kept in a safe location. With all the
identity theft, it's really scary" ... "I know you will be careful
with my info. It's a bit scary just throwing it out there."

Identity theft is very real. Any financial institution that forces family
members to reveal their SSNs to one another is insensitive and bureaucratic.
Shame on them!
Subject: Re: Is beneficiary's SSN a legal requirement for a Roth IRA?
From: elwtee-ga on 13 Jun 2005 07:11 PDT
 
rambler,

i find your response to my post very revealing. you went through my
post line by line. well except for the two direct quotes from the
internal revenue code i quoted for you which seem to address your
issue quite directly and authorize the providers to ask for exactly
what they are asking you for. i guess they don't play well into your
rant. so it seems to me that you don't really want an answer, you want
to slay windmills. have at it and have fun.

as to whether you have ever been asked for information before, i can't
address what you have or haven't done. what i can tell you is a couple
of things. thirty years into a career managing money one of the most
typical responses from new clients when asking for personal
information is, "why do you want that? nobody ever asked for that
before." that includes clients who have in fact delivered but
forgotten that they provided the information not only before, but to
me before. two, again i don't know who you deal with or on what level
but i can say with impunity that i have never filed this type of
documentation without the information you are being asked for.

i find it odd that your family members feel uneasy giving you personal
information for the purpose of making them beneficiary of your
financial assets. is there something about your background you're not
telling us that would make them suspicious. you also conveniently
avoided addrressing the work around i gave you to solve your problem.
again indicating to me you are more interested in ranting and venting
than problem solving. to each their own i suppose.
Subject: Re: Is beneficiary's SSN a legal requirement for a Roth IRA?
From: rambler-ga on 13 Jun 2005 07:29 PDT
 
I admit that I was indeed ranting, and for that I apologize.  When I
get frustrated, I rant.

To elwtee-ga, my remarks were not meant as a personal attack upon you.
 I went through your original comment line by line because that is the
nature of my profession (business analyst). I apologize if I offended
you.

As to my original question, well, no one (yet) has proved that it is a
legal requirement to provide a beneficiary's SSN. It sounds like it's
just bureaucratic red-tape.
Subject: Re: Is beneficiary's SSN a legal requirement for a Roth IRA?
From: elwtee-ga on 13 Jun 2005 08:29 PDT
 
rambler,

i disagree with your assessment that no legal authority has been
supplied. i might suggest you reread the two internal revenue code
sections i quoted for you. i think they quite clearly say the
requirement is well within legal bounds. the sections, including some
other code sections that for brevity i didn't include, in english say,
if a named person is or might eventually be subject to some provision
of the act then the entity filing the document shall provide an
identifying number of the named party for identification purposes. the
second quoted section explicitly says the social security number is
the identifying number. what else do you want it to say?

as to your line by line assessment of my post, i understand fully how
to and engage in said activity as a regular pattern of behavior. while
i appreciate the apology i actually didn't take it as an attack. i was
more reacting to the selective nature of the line by line review. to
me, as i said, your review was selective. you completely avoided an
mention of the code and implications thereof as relate to your
question. i think you can attempt to offer differing interpretation of
the sections quoted but simply ignoring them and standing your ground
that no answer had been provided prompted me to respond. i felt you
further avoided the simply work around i suggested as resolution of
your problem. i'm sure that the provider will allow the beneficiary to
supply identifying documentation directly to them without it passing
through you.

Important Disclaimer: Answers and comments provided on Google Answers are general information, and are not intended to substitute for informed professional medical, psychiatric, psychological, tax, legal, investment, accounting, or other professional advice. Google does not endorse, and expressly disclaims liability for any product, manufacturer, distributor, service or service provider mentioned or any opinion expressed in answers or comments. Please read carefully the Google Answers Terms of Service.

If you feel that you have found inappropriate content, please let us know by emailing us at answers-support@google.com with the question ID listed above. Thank you.
Search Google Answers for
Google Answers  


Google Home - Answers FAQ - Terms of Service - Privacy Policy