llegal Alien in 401(k) Plan

[jkdoll2]

Just found out a participant in a plan for the last 5 years is illegal. She has taken a loan out. The plan does not allow for illiegal aliens.

What do you do with the deferrals and match that has been deposited for her? Do they have to make her whole outside of the plan and forfeit the money? Do you treat it like an ineligible participant?

What if her social security number is fake? If you give her money outside fo the plan - how does it get reported to the IRS - with her fake SS #? She will probably be fired - and I dont think they will want to give her more money outside of the plan.

Thanks

[rcline46]

Does the plan have a specific category exclusion of 'illegal alien'? If not, then the plan has no such exclusion. The person is a valid participant with an invalid SSN

[jkdoll2]

Does the plan have a specific category exclusion of 'illegal alien'? If not, then the plan has no such exclusion. The person is a valid participant with an invalid SSN

Yes - the plan excludes illegal aliens. Thanks

[K2retire]

Many plans exclude non resident aliens, but I've never seen one that actually excluded illegal aliens. Double check the language because they are not the same and non resident alien for plan purposes is different than what most people think it is.

[jkdoll2]

Many plans exclude non resident aliens, but I've never seen one that actually excluded illegal aliens. Double check the language because they are not the same and non resident alien for plan purposes is different than what most people think it is.

Our underline document says they exclude all non-resident aliens and resident aliens . They are here in the US illegally and should not get W-2 income. Thanks

[mphs77]

Just found out a participant in a plan for the last 5 years is illegal. She has taken a loan out. The plan does not allow for illiegal aliens.

What do you do with the deferrals and match that has been deposited for her? Do they have to make her whole outside of the plan and forfeit the money? Do you treat it like an ineligible participant?

What if her social security number is fake? If you give her money outside fo the plan - how does it get reported to the IRS - with her fake SS #? She will probably be fired - and I dont think they will want to give her more money outside of the plan.

Thanks

Does the Plan contain "mistake in fact" language that you may follow to return the monies in question?

I would think that would be guidance needed to allow for returns and forfeitures that result from this type of issue.

[Kevin C]

Our underline document says they exclude all non-resident aliens and resident aliens .

So your document excludes everyone who is not a US citizen? Aren't there federal law provisions preventing discrimination against legal resident aliens?

[jkdoll2]

Our underline document says they exclude all non-resident aliens and resident aliens .

So your document excludes everyone who is not a US citizen? Aren't there federal law provisions preventing discrimination against legal resident aliens?

The person is not legal - she is illegal. She has a fake SS #. Probably needs to be deported. If she was a legal resident - then no problem - but she isnt.

[KJohnson]

Jkolsen--The plan language that you quoted would appear to exclude resident aliens who are here legally as well as illegally. If that is indeed indeed what your document says you might have operational issues to the extent that you have legal aliens participate as well as discrimination issues for having the provision in the first place. Maybe your document says something different from what you quoted?

[GBurns]

jkolsen

You seem to have too much emotion involved to be able to understand the responses. Step back and take a deep breath.

Illegal alien status is irrelevant. That you think the person should be deported is irrelevant.

When telling us what a Plan Document states, it is usually best to cite the actual wording used rather than use your interpretation or paraphrasing.

As other posters have tried to point out, it is very unlikely that your plan mentions illegal aliens. Your definition of "illegal aliens" is irrelevant. As also pointed out, if the Plan has the wording that you say that it has, your plan has bigger problems that should be of greater concern than this "illegal alien".

Focusing on this alleged "illegal alien" to the possible detrement of the entire plan does not seem rational.

Neither you nor the Plan are the determiners of what constitutes an "illegal alien". The Plan is concerned about eligible participants.

[Lou S.]

GBurns, good post.

It sounds like the person is eligible to me from the facts described. The issue would appear to be how do you pay her out if/when she is fired and how to report the distribution on a 1099-R since is sounds like she does not have a valid SSN.

[jkdoll2]

She was terminated yesterday - and we will pay her out like an eligible employee since she was getting W-2 wages. The IRS will have to deal with the bad SS#. Thanks for all your input - and sorry if I seemed upset - didnt mean to.

jkolsen

You seem to have too much emotion involved to be able to understand the responses. Step back and take a deep breath.

Illegal alien status is irrelevant. That you think the person should be deported is irrelevant.

When telling us what a Plan Document states, it is usually best to cite the actual wording used rather than use your interpretation or paraphrasing.

As other posters have tried to point out, it is very unlikely that your plan mentions illegal aliens. Your definition of "illegal aliens" is irrelevant. As also pointed out, if the Plan has the wording that you say that it has, your plan has bigger problems that should be of greater concern than this "illegal alien".

Focusing on this alleged "illegal alien" to the possible detrement of the entire plan does not seem rational.

Neither you nor the Plan are the determiners of what constitutes an "illegal alien". The Plan is concerned about eligible participants.