Unmarried profit sharing plan participant dies without an executed beneficiary designation. Plan document specifies that death benefit is paid to parents and siblings per stirpes, and these beneficiaries are Mexican citizens.
I have reviewed a previous thread on the subject of payments to foreign citizens (b2kates contributed) and reviewed various IRS forms and publication 515. It looks as though the procedure would be as follows:
- Mexican beneficiaries get a ITIN using Form W-7.
- The beneficiaries complete Form W-8BEN using the ITIN and submit this to the plan administrator. The W-8BEN allows the plan administrator to have no tax withholding on the death benefit distribution (under claim of Mexico/US tax treaty benefits).
- The plan pays the beneficiaries with no withholding.
- The plan files Form 1042-S to report the distribution (not 1099R).
Do I have this right? Any confirmation/comments appreciated.
Full Version: Procedure for death benefit payment to Mexican citizen.
We had a similar situation with a German beneficiary recently, and that was exactly how we handled it.
This is a "lo-fi" version of our main content. To view the full version with more information, formatting and images, please click here.