Which brings us to an important point. If an already registered member makes a distribution, the instructions on the form indicate that it is optional to re-declare them to indicate that they are no longer eligible for other benefits. The first reaction might be to skip this step if it is optional. However, if you do not “declare” members, you may face a difficult challenge when they later receive a letter from the Social Security Administration telling them that they are eligible for a benefit from your plan. For this reason, we always recommend that you re-register participants as soon as they have been paid. Our company has been very lucky to achieve low sales over the years. Those who left were not eligible for our 401(k) plan, or they had very small balances and their accounts were forced when they resigned. We recently had a long-time employee who passed away. She has been an active member of our plan and has a substantial balance that is well above our plan`s mandatory payment threshold. Our APT said that we now have to file a new form — an 8955 SSA, I think — that has something to do with this former employee.
The following changes have been made to Form 8955-SSA for 2020 filings. However, if your Form 5500 for the year is also late and you correct this through the Ministry of Labour`s Outstanding Tax Filer Voluntary Compliance Program, you will also receive a “credit” for correcting your late Form 8955-SSA. Form 8955-SSA is the annual registration declaration that identifies separate members with deferred vested benefits. Clearly, this form notifies the IRS of all participants who have terminated their employment but still owe vested benefits. The form must include the social security number, name and vested benefits due for each participant who must be declared. Although it is a completely separate and stand-alone form, the deadline for filing Form 8955-SSA is the same as the deadline for filing Form 5500, which is seven months after the end of the plan year. As with Form 5500, the time limit can also be extended by 2 and a half months by filing Form 5558. The form requires the plan sponsor to report any member who has been terminated in a previous year and who is still entitled to free passage from the plan on the balance sheet date. For example, the 2020 plan year form must report any employee who was fired in 2019 and who still has a balance in the plan at the time the form is submitted. Although filed with the IRS, the information is shared with the Social Security Administration (SSA), which keeps it in a database. When individuals apply for Social Security benefits, SSA queries their database and informs applicants that they are eligible for benefits under the plan.
The plan sponsor must file Form 8955-SSA if they are required to file Form 5500 and if at least one member has been dismissed and is still in need of vested benefits. They must also file Form 8955-SSA to report a change in the status of a dismissed member who has received their benefit or is no longer eligible for their benefit. The instructions state that if Form 5500 for 2021 is the final declaration of the plan, Form 8955-SSA filed for the 2021 plan year must include information about deferred acquired members, including the declaration that previously reported deferred vested members are no longer deferred vested members. The form includes a way to update previously reported information to indicate that a member has made a full payment and is no longer benefiting from the plan. Although this report is optional, we strongly recommend that you do so, as we explain below. Form 8955-SSA is due at the same time as Form 5500, seven months after the end of the plan year. If an extension is granted through Form 5558, Form 5500 and Form 8955-SSA 91/2 are due months after the end of the plan year. Keep in mind that Form 8955-SSA is filed with the IRS, while Form 5500 is filed with the Ministry of Labor. Typically, the company preparing your Form 5500 also prepares Form 8955-SSA, and the IRS accepts both electronic and paper filings.
DWC archives forms electronically on behalf of its clients in a batch submission. All you have to do is approve the project that we will send you for review. For more information on Forms 8955-SSA and 5500, visit our Knowledge Center here and here. The IRS has updated the instructions for Form 8955-SSA, Annual Registration Declaration Identifying Separate Members with Deferred Vested Benefits. Form 8955-SSA is used to report information about any member who has separated from the service covered by the plan and who is eligible for deferred vested benefits under the plan but is not receiving that retirement pension. The information reported on forms 8955-SSA is usually shared with the Social Security Administration, which shares the information reported with separate participants when they apply for social security benefits. If you have any questions about the Application for Filing Form 8955-SSA, please contact DWC at 651.204.2600. The IRS also posted an FAQ on its website. For more information on filing Form 8955-SSA and other deadlines for plan sponsors, please visit our Knowledge Centre here. Topics: Question of the Week (QOTW), DWC, Form 5500, Plan Compliance, Form 8955-SSA, Mandatory Distribution There are many forms that may apply to pension plans.
Feel free to call or email us if you have any questions about this. The IRS has issued Form 8955-SSA for 2019 with its separate instructions. Form 8955-SSA, which can be filed on paper or electronically, is used to report certain information about separate members with undistributed vested benefits. Applicants who file at least 250 returns of any kind with the IRS during the calendar year that includes the first day of the plan year, including Forms W-2 and 1099, must generally file Form 8955-SSA electronically. Form 8955-SSA electronic filings use the IRS`s Fileing Information Returns Electronically (FIRE) system and must meet the specifications of Publication 4810, which was also recently updated. Only limited changes have been made to these documents. EBIA`s response: The instructions on Form 8955-SSA indicate that an applicant is treated as if they had not filed a filing at all when paper forms are filed when electronic filing is required. Therefore, paper-based applicants must ensure that they are not subject to the requirement to file an electronic return. If e-filing is required but represents an unreasonable economic difficulty, applicants may be able to obtain a waiver of the e-filing application (see our Checkpoint article). Publication 4810, which contains detailed specifications for electronic filing, is reviewed regularly, but not necessarily annually.
Users should ensure that they have the latest version to avoid difficulties in using the system. For up-to-date documents and other resources, users may find it helpful to get started on the IRS website, Form 8955-SSA Resources. For more information, see Section XXXI.M (“IRS Filings Related to Form 5500”) of the EBIA 401(k) Plan Manual. Specifically, the administrator of any plan subject to vesting requirements must file Form 8955-LSS for members who have deferred vested benefits under the plan and: For this reason, we recommend that the return of former employees be revoked once they have made a full distribution. This employee may not remember that he or she has already received his or her money from the plan, and it can be very difficult to explain this fact if he or she has an “official” letter from the government stating that he or she is entitled to a benefit. The form and other useful information can be found on the IRS website: Plans use the form to report former members who still have balances in the plan, but there is some delay between a member`s termination date and the time they must be reported. The best way to explain it is with a quick example. Let`s say your plan works over the course of a calendar year and Joan Participant ends the employment relationship in 2017. If Joan still has a balance earned in your plan at the end of 2018 (the year following the year she ends), she must be reported on Form 8955-SSA for the 2018 plan year. The deadline for submitting the form is the same as for Form 5500 – July 31, 2019 or October 15, 2019 if it is extended. One way or another, but not really. First, the IRS recommends filling out the form as soon as possible after determining that it is too late.
As mentioned above, they will contact you directly if they decide to impose a penalty. www.irs.gov/Retirement-Plans/Form-8955-SSA-Resources To put this particular form in context, the “SSA” stands for Social Security Administration, and the purpose of the form is to reunite retired members with old retirement account balances that they may have forgotten. More information about these penalties can be found on the IRS website here. The IRS has issued instructions for Form 8955-SSA, Annual Registration Statement Identifying Separate Members with Deferred Vested Benefits, to be used for filing with respect to the 2020 plan year. Form 8955-SSA is used to meet the reporting requirements of Section 6057(a) of the Internal Revenue Code. It is used to report information about any member covered by the plan who has retired and is entitled to deferred vested benefits under the plan but is not receiving that pension. The administrator of each plan subject to the vesting requirements must file Form 8955-SSA for members who have deferred vested benefits under the plan and: Form 8955-SSA (Annual Registration Declaration to Identify Separate Members with Deferred Vested Benefits) and Instructions (2019); Publication 4810 (Specifications for electronic filing of Form 8955-SSA, annual registration declaration to identify separate members with deferred vested benefits) (updated December.