Compliance Question of the Week

 

Should a deceased member’s account(s) continue to earn dividends?

The two issues to consider are the Internal Revenue Service (IRS) and your contractual relationship with your member. First of all, you will need to check your contract of deposit to determine if death means that an account will no longer earn dividends. It is most common for the contract to continue to pay dividends even if the member is deceased. Presuming the contract does allow for continuing dividends, you want to be sure you are reporting these accurately to the IRS. If your member is recently deceased and no one has yet come in to take charge of the account, just report dividends under the member’s social security number (SSN), much as if he or she were alive. If, however, someone has come in to take charge of the account, you will need to encourage that person to close the account and open a new one using his or her own SSN or the tax identification number (TIN) of the estate, or to simply re-assign the existing account to the correct SSN/TIN. The IRS likes to have this done by the end of the taxable year following the death of the member.

 

Questions? Contact the Compliance Hotline: 1.800.546.4465, compliance@nwcua.org.

Posted in Compliance.