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August 26, 2024
Updating Plan Records When A Participant Changes Their Name
Welcome to the Retirement Learning Center’s (RLC’s) Case of the Week. Our ERISA consultants regularly receive calls from financial advisors on a broad array of technical topics related to IRAs, qualified retirement plans and other types of retirement savings and income plans, including nonqualified plans, stock options, Social Security and Medicare. This is where we highlight the most relevant topics affecting your business. A recent call with a financial advisor in Florida is representative of a common question on name changes.
"My client recently married and changed her legal name. She’s wondering how she updates the IRS with the new information."
When a name change occurs, the IRS wants the individual to inform the Social Security Administration (SSA) as soon as possible. The name on a taxpayer's tax return must match SSA records.
To change the information on a person’s Social Security record, the individual must provide documents that prove their identity, support the requested change, and establish the reason for the change. The documents must be originals or copies certified by the agency that issued them. The SSA will not accept photocopies or notarized copies.
To make a name change, the individual files a Form SS-5 with the SSA and provides one of the following documents:
Marriage document,
Divorce decree,
Certificate of naturalization showing a new name or
Court order for a name change. (1)
Documents supporting a name change must be recent and identify the individual by both their old and new names. If the name change event occurred over two years ago or if the name change document does not have enough information to prove the individual’s identity, the individual also may need to provide documents to prove their identity in their old name and/or, in some cases, their new legal name. That can be done by providing a
US driver’s license,
US state-issued non-driver card or
US passport.
If those are not available, the form does list a few other options: Employee identification card, school identification card, health insurance card or U.S. military identification card.
For plan and IRA purposes, a participant/IRA owner who has a name change will have to provide documentation to the plan/IRA administrator to update its records. Retirement plans have a responsibility to ensure proper tax reporting is done or face penalties. The plan/IRA administrator should have a policy in place regarding what documentation is necessary to make the change. A copy of the above-mentioned Form SS-5 filing may be an option. Similar updating requirements would apply for other financial accounts.
Conclusion
When a person experiences a name change, the first federal agency to inform is the SSA by filing Form SS-5. The name on a taxpayer's tax return must match SSA records. For updating retirement plan and other financial account records, check with the administrator for necessary documentation.