Distribution to illegal alien

[Guest Thomas Pritchett]

An employer has discovered that one of his employees provided false information (ID, SSN, etc) and is an illegal alien. After the discovery the employee was terminated. The employer sponsors a discretionary profit sharing plan. The illegal alien received allocations in the plan.

In a way, this is somewhat of the reverse of an otherwise eligible employee not having received a proper allocation and the plan sponsor's taking corrective action to provide benefits that the employee should have received.

Does that fact that this person provided false imformation that resulted in his employment and coverage require corrective action to reallocate his account balance to the legal employees who would have otherwise received the allocation or is the plan required to distribute the benefits ?

Thanks,

Thomas Pritchett, CPA

[WDIK]

See if this helps.

[Guest TCP]

Thanks for the link to the prior posts here. It was a great help !