We all know or are related to someone who may be an undocumented immigrant. Whatever your political stance, the topic of undocumented immigration has long been a hot button issue. The United States has a long history of immigration tied to its founding and commercial expansion. Yet, we all know how difficult life is for undocumented immigrants in this political climate. However, they are here, working, and contributing to the American experiment. So, can undocumented immigrants open an IRA?

That is not an easy question to answer.

Undocumented immigration is a lever of industry that financially benefits the United States. That can’t be denied.

The United States’ population is 330 million. There are over 10.5 million undocumented immigrants in the United States. Undocumented immigrants comprise about 7.6 million of the 160 million strong American work force. That’s 5% of the American workforce.

While the employment numbers of undocumented immigrants is not a hefty number, it’s not insignificant either.

Also, while critics of undocumented immigration cite their financial drain on social services, it must be asserted that they pay taxes.

Undocumented immigrants pay into the American system.

Can undocumented immigrants open an IRA?

Yes, but under exacting and qualifying circumstances.

This is only possible in states where undocumented immigrants are allowed to get state validated IDs and bank accounts.

Undocumented Immigrants, Taxes, and Driver’s Licenses

Undocumented immigrants can’t have Social Security numbers.

However, they can pay taxes via Individual Taxpayer Identification Numbers (ITIN) and/or payroll taxes.

An ITTN is the closest equivalent of a Social Security card that an undocumented immigrant can own.

If you want to answer, “can undocumented immigrants open an IRA?”, its important to understand how much they pay into the system.

As per IRS statistics, over 4.3 million tax returns are filed annually with ITINs.

In 2015, undocumented immigrants contributed almost $14 billion in federal taxes. That is not including another $12 billion paid annually via payroll tax deductions.

The inclusion of undocumented immigrants to business life extends to document processing.

After all, it’s irrelevant to ask, “can undocumented immigrants open an IRA?” if they don’t have valid ID.

About 13 states, including California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, New Mexico, New York, Nevada, Utah, Vermont, Washington and the District of Columbia allow undocumented immigrants the ability to apply for driver’s licenses.

Over nine more American states are introducing legislation to do the same this year alone.

So, if they can do these things, can undocumented immigrants open a bank account?

And, can undocumented immigrants open an IRA?

The answer is yes. However, the processing for such is extremely exacting.

If you know an undocumented immigrant could use this information, here is what you should know.

Can Undocumented Immigrants Open an IRA? – Yes

Opening an IRA or bank account is not an easy matter for an undocumented immigrant.

Undocumented immigrants can technically open a 401(k), traditional IRA, or Roth IRA with qualifying ID like an ITTN.

However, not every state or employer may extend such opportunities. Remember, this is an atomic hot potato political issue in this country.


In states where it is allowed, an undocumented immigrant must be at least 21 years old to qualify for opening an IRA.

Additionally, they must have worked for a qualifying employer offering such retirement plans for a year or over 1,000 hours.

It takes at least a decade to accrue enough value in an IRA. The process can take decades.

For undocumented immigrants planning to return to a home country within a few years, opening an IRA may be self-defeating.

Undocumented immigrants, who are more likely to be financially strapped than American citizens, should be aware of all IRA-related financial penalties.

There are 10% financial penalties and taxes for early IRA withdrawals under the age of 60.

Undocumented immigrants can even open bank accounts. However, such a privilege would depend on the state laws of residency.

Now that we have answered the questions of, “can undocumented immigrants open an IRA?”, let’s explain required ID documentation.

ID Application Processes for Undocumented Immigrants

An undocumented immigrant wanting to open an IRA or bank account will need documentation including but not limited to:

  • Valid passport
  • Foreign-issued government IDs
  • Birth certificate
  • ITIN number

Required documents differ from bank to bank, but an ITIN will always be required.

Undocumented immigrants can apply for an ITIN via the W-7 form through the IRS. An ITIN must be renewed every 5 years.

If you don’t use an ITIN for 3 straight years, it automatically expires.

It’s important to keep in mind that ITINs don’t prove immigration nor work authorization status.

Keep Good Records and Know the Rules

So, Can Undocumented Immigrants Open An IRA?


But the application processes required for undocumented immigrants to open an IRA can be complicated, overly bureaucratic, and time consuming.

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