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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? |
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There is no answer at this time. |
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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. |
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