illegal immigrant & benefits

[Guest BarryK]

A client recently had an employee terminate because he was an illegal immigrant. That employee has profit sharing and deferral amounts in the plan, fully vested. What happens to the terminated illegal immigrant's retirement money?

[MGB]

Distribute it to him in the same manner as you would anyone else.

There are a handful of other threads on this same subject.

[Guest BarryK]

Thank you MGB. My key word searches of the boards availed me of nothing useful.

[david rigby]

Try again. For example, http://benefitslink.com/boards/index.php?showtopic=23859

[mbozek]

You better think this through before making payment. The only way you can pay this person is if you are sure of his true identity which is going to be difficult if he used a false identity to obtain employment. What documentation are you going to request to prove his true identity if the original documentation, e.g., SSN, drivers liscense, birth certificate, etc. are false? How can the PLan admin verify the true identity of a person who committed identity theft to become employed? The risk the plan sponsor runs if it pays benefits is that another claim will be made for the same benefits using different identity documents. People who are terminated for being illegal immigrants are usually deported and never apply for their benefits which can be forfeited if the plan permits forfeiture.

[Harwood]

Most people who are terminated in these circumstances lose their jobs because it is discovered that they are using an incorrect social security number. They are not usually deported but go on to find other jobs in the United States.

The employer has multiple documents on file with the signature of this person, so they can verify that the correct person is applying for the benefits.

[david rigby]

The employer has multiple documents on file with the signature of this person, so they can verify that the correct person is applying for the benefits.

Maybe. The employer may have multiple documents for that social security number, but that does not mean they all have the same signature.

[mbozek]

H: if an employee has used an incorrect SS no. there are procedures to correect the ssn since w-2 income will be credited to the person with the wrong SS no. Employees are terminated for using a false identity because they are not legally permitted to work or be in the US, not because of using an incorrect ss no.

I dont see any significance to have multiple signatures attesting to a false identity (some of which were submitted under a penalty of perjury) since any other identity documents preporting to show the correct identity presented to the plan admin will probably be false.

[Harwood]

My experience when I was in payroll:

1. The worker uses their real name but a false SSN. It may or may not be someone else's SSN. The object is not identity theft but to get a paycheck.

2. When the false SSN is discovered, employee is asked for their correct SSN. They cannot provide a correct SSN because they are an illegal immigrant. Employment is terminated.

3. Whoever they may be, they accrued a benefit for the work they did perform. I think they deserve to be paid that benefit; some may think not since the worker had no legal right to work in these United States. I think if they used their real name while employed, the Plan Administrator has evidence who they are [signatures on employment documents] and can give them a distribution.

[david rigby]

Maybe. The false SSN may have provided a plan entry date that the illegal would not have attained otherwise.

There are numerous examples of illegals re-using SSNs. If the SSN is the only identifier, abuse happens.

[mbozek]

Illegal workers do not use their real names and false SS numbers because it is not sufficient for legal employment. They purchase a package of documents including a birth certificate issued in the name of a us citizen, phony drivers license and ss card in order to satisfy the information required on the I-9. The discovery of the phony ss number leads to the discovery that all identity documents are false.

[Belgarath]

I don't begin to know how to handle these situations. and they are varied enough so that even a solution that seems resonable in one situation won't quite "fit" another situation. It seems clear that the employees, whether illegal aliens or not, must be covered under the plan if they have U.S. source income. And they are entitled to receive a distribution when they terminate employment. But then the rot sets in - in real life administration you get into an endless circular flow, with conflicting legal obligations which can't necessarily be reconciled: They are entitled to a distribution. But how can you pay them and withhold when they can't provide you with valid identification? But they are entitled to a distribution....

First, I'd employ legal counsel to guide me through this maze. Second - I'd hope that they never apply for the benefits. If they don't, treat them as a forfeiture to the plan. Finally, if they do apply for benefits, either upon termination or at some future date, I'd go back to #1 and rely upon advice of counsel. I think it's a no-win situation, which is crying for guidance. Unfortunately, I have little faith that any guidance will be clear, concise, and administrable. Congress and/or the IRS have a history of taking small problems, and while making a good faith attempt to correct them, making them worse.

[Guest FYI411]

There are legal questions because it is not legal to knowingly keep an illegal immigrant on the payroll.

Is a person with the status of illegal immigrant, entitled to the benefits they worked hard for. Consult an attorney but I would hope yes.