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Reporting Deferred Vested Pension Participants

July 13th, 2014 No comments

If you administer an ERISA 203 employee benefit plan, you are required to file IRS Form 8955-SSA, Annual Registration Statement Identifying Separated Participants With Deferred Vested Benefits. The form provides information about plan participants who no longer work for the company and who have deferred vested benefits. It also covers instances where the benefits were transferred from another plan, paid out benefits, and corrections to previous filings. The IRS passes the information along to the Social Security Administration, which reports it to new filers when they apply.

Filing Requirements

Plan administrators subject to ERISA Section 203 vesting standards must file Form 8955-SSA, This doesn’t include annuity contracts or custodial accounts as long as they were issued before Jan. 1, 2009, the employee stopped contributing before that date, the terms can be enforced without employer involvement, and the participant is fully vested. If you sponsor a plan for a church, government agency or other exempt institution, filling the form is voluntary. If you are ending the plan, you must file the form when you file Form 5500. You have to file Form 8955-SSA by the end of the seventh month following the last day of the plan year, although extensions are possible.

The rules about participant reporting differ between single- and multiple-employer plans. For single-employer contributions, file the form for participants that separate during the plan year and are entitled to a deferred vested benefits. If more than one employer contributes, report entitled participants that have incurred two successive one-year breaks in service. In either case, omit participants who’ve received some or all of the benefit, have returned to service or have forfeited their benefits. However, report when plans stop paying before all benefits have been paid out. In cases of transferred plans, both the old and new administrators must fill out portions of 8955-SSA.

Filling out the Form

In Part I:

  • Plan year
  • Voluntary or mandatory filing
  • Amended filing, extended filing

In Part II:

  • Plan name, number and sponsor and trade name
  • Sponsor’s employer identification number and address
  • Care of, in case you want a third party to receive mail for the plan
  • Plan administrator’s name, address and EIN
  • Any change to the administrator’s name or EIN
  • Number of entitled participants who separated during the plan year or separated in the previous year but weren’t reported
  • Affirmation that the administrator provided an individual statement to each entitled participant
  • Signature of plan administrator

In Part III:

  • Plan name, plan number and sponsor’s EIN
  • Filing code:

o   A: participant not previously reported

o   B: modify previous information

o   C: transfer

o   D: participant no longer entitled to deferred benefits

  • For each participant:

o   Participant Social Security number, name, and whether or not the information is complete

o   Type of annuity

o   Benefit payment frequency

o   Amount of periodic payment

o   Account value

o   Previous plan EIN

Penalties

Failure to file can get expensive. The IRS assesses $1 per day per participant for delayed filings, up to $5,000. If you fail to notify the IRS about a change to the status of the plan, the penalty is $1 a day up to $1,000. Failure to send individual statements to participants before the filing deadline will cost you $50 each.

You can reduce the filing burden by buying Form 8955-SSA software or having a service bureau produce and file the forms for you. The IRS encourages you to file the form electronically.

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A-Z Guide to IRS Form 8955-SSA

November 15th, 2013 No comments

Pension plans generally come under the purview of tax exemptions because they are essentially meant for the employee’s future benefit. When it comes to how the pool is invested, it’s easy for the employee, however hard it is on his pocket, to simply put in an amount every month and forget about it, knowing that they can’t touch it for years. However, it becomes the employer’s responsibility to see to it that even after the employee is no longer under the umbrella of the plan, his/her beneficiaries benefit from it. The following law and the subsequent documents were created out of the concern for pension plans to private workers and to safeguard their and their families’ interests.

The Internal Revenue Service (IRS) Form 8955-SSA is to be filled with respect to the United States’ Employee Retirement Income Security Act, 1974 (ERISA). The Act is a centralized federal law that establishes minimum standards and extensive rules for private industry workers’ pension plans, as well as the income tax effects of dealings associated with the workers’ benefit plans. The purpose of the Act is to protect the interests of the contributors and beneficiaries of the employee benefit plans by divulging necessary plan information to them, establishing standards for recognizing such benefits and providing for appropriate remedies.

So what is the Form 8955-SSA?

Form 8955-SSA is the official registration document required to be used by ERISA plans to report to the IRS the members who have left the plan and its services and have overdue benefits remaining in the vested plan even after their departure. The information then goes from the IRS to the Social Security Administration (SSA), which uses the information to reach out and inform applicants and/or their beneficiaries about the social security benefits that they may be entitled to and certain delayed benefits that might be payable to them due to vested interests in a retirement plan in which the applicant participated.

This Form is a standalone reporting form which is the nominated successor of the Form 5500 and is reported and filed to fulfill the requirements of the tax law which became effective subsequent to 31st December, 2008.

Who has to file the Form 8955-SSA and when is it due?

Employers who are required to file the Form 5500, which is part of ERISA’s general reporting and disclosure charter, and who have contributors with deferred vested benefits are required to file Form 8955-SSA. The statutory due date for filing both forms, although filed separately, is the last day of the seventh month following the end of the plan year. Extensions of 2.5 months are allowable subject to filing Form 5558 by the same statutory date. Additionally, the Form 8955-SSA needn’t be filed for a year with no such information.

Is the filing of Form 8955-SSA necessary ever year?

Unless and until there is absence of information about the plan and employees to file, Form 8955-SSA has to be filed every plan year.

What’s in the Form 8955-SSA?

The IRS has already released a draft form this year with the tax form, instructions, or publication, which the IRS is providing for the plan administrators’ information as a courtesy. The information includes the plan name and number, information about the plan sponsor and administrator, number of participants who separated on a required basis as well as voluntarily, their details such as their entry codes, social security numbers, the amounts vested towards their benefit and their EINs. The codes indicate why the member is being shown under that category.

A copy of the draft plan has been put up on the IRS website, with clear instructions not to file the same as the IRS is yet to release the final form.

Who all qualify under Form 8955-SSA?

People can either be a part of a single employer or a multi-employer benefit plan. In general, for a single employer benefit plan (for which only one employer or plan administrator contributes), a member must be stated on the 8955-SSA Form:

  • If a participant separates from and leaves the services under the umbrella of the plan during a plan year, and/or
  • If a participant has separated from the plan and is permitted to a deferred vested benefit under it, and:

–        Was reported as delayed on another plan’s filing

–        Was previously stated in the plan and has been compensated or is no longer eligible

–        Was previously in the plan and whose information is being amended.

The above information must be reported and filed for the year succeeding the year of plan in which the participant left the plan, although earlier filing can be done as well.

For a multi-employer benefit plan, a member must be stated on the 8955-SSA:

  • If he/she incurs two successive 1-year breaks in service, and
  • If he/she is eligible for a deferred vested benefit under the provision.

The above information must be reported and filed for the year of plan in which the participant completes the 2ndof the two consecutive 1-year breaks in service. Earlier filing and reporting may also be done.

Is a member eligible to be reported when he/she begins getting the benefit?

As mentioned earlier, if a member has stopped receiving a benefit but is still eligible for the overdue payment, in that case he/she is eligible for the delayed vested benefit.

Exclusions and deletions under Form 8955-SSA

A participant is not required to be reported before the required date of filing:

  • If he/she has been paid a part of or the entire amount of the overdue assigned retirement benefit, or
  • If he/she returns to provision covered by the plan and/or accumulates additional retirement assistances under the umbrella of the provisions, or
  • If he/she forfeits all the overdue vested benefits.

The Form also allows plan administrators to delete detached participants who were formerly reported if their vested benefits were consequently dispersed in full. The best practice is to include previously reported separated participants to be included as deletions in the year, as it makes keeping records easier. The form also gives the plan sponsors the choice to include participants separating in the current year or in the former year, as mentioned above.

Transfer of deferred vested benefits and their reporting

In the event of the transfer of the vested interest plan of a participant from one employer to another, both the transferor and transferee plan administrators should report information regarding the member.

The transferor plan administrator is to report on Part III, Line 9, and Code D that the benefits of that certain member have been paid and he/she is no longer eligible. The transferee administrator is to report either on Part III, Line 9, and Code C (member already previously reported and the information has been received) or on Part III, Line 9, and Code A (no earlier reporting of member or information disclosure).

The “Special extension” box on Form 8955-SSA

This extension box is only to be checked for extensions in the event of disasters declared so by the government, or supporting the US Army in the Combat Zone.

Obtaining Form 8955-SSA

The Form 8955-SSA can be downloaded off the IRS website very easily, which is accessible 24X7. Employers can also order the Form by calling the 1-800 TAX-FORMS (1-800-829-3676) given on the IRS website or collect it in person from the local IRS office. Before plan administrators start filling the forms with the requisite information, they are encouraged to go through the through instructions on the IRS website regarding the filling of the form, the changes and amendments, and the information requirements for correct and hassle-free filing.

How and where to file Form 8955-SSA?

With the world going paperless day by day, electronic submission of documents not only saves time, money and resources but also helps maintain accuracy. Hence, the IRS and SSA encourage all plan administrators to file Form 8955-SSA electronically.

The IRS has also adapted a system for easing e-filing and permitting voluntary e-filing of the Form 8955-SSA, aptly called the FIRE, which is filing the returns electronically. The Form 4419, which is the application for the same, must be filled to request a definite TCC (control code for transmitter) for the transmission of the Form. A single TCC may be used for all client plans. All the instructions, numbers and forms can be easily found on the IRS website. The e-filing procedure at this point of time doesn’t require the any signature. However, it is prudent to ask the clients to review, sign and preserve a paper copy of the completed form for future reference. The physical copy of the Form 8955-SSA that is sent across to the IRS must have the signatures of the plan administrator and sponsor at the bottom of the first page. If both are the same individuals, then the plan administrator solely needs to sign.

Additionally, if there are any changes to the plan and/or the administrator, then they should be duly notified to the Secretary of Treasury. Additionally, they are also to be reported by the plan administrators on Form 5500 in the year of plan in which such change happens.

The completed Form 8955-SSA has to be sent to the official IRS address in Utah. Apart from the US mail services, employers can also avail of private delivery services designated by IRS to meet the timely filing deadline. Some of these designated services include some of DHL’s, FedEx’s and UPS’s services. For a complete list, the IRS website can be accessed. These private delivery services have to send the forms to a separate address of the IRS. The IRS website has all the required information including the addresses and the lists and instructions.

Who signs the Form 8955-SSA?

On the physical copy of the Form 8955-SSA, both the plan sponsor and the administrator need to sign at the bottom of the first page. If both are the same people, then the plan administrator solely needs to sign.

Finding information on third-party software providers

Right from the forms, specifications and the requirements of e-filing through the FIRE system and its processes to the SSA standards for testing barcodes, any and all information on and about third-party service providers can be accessed at the Form 8955-SSA Resources page on the IRS website.

Credentials needed to submit this sensitive information electronically and how to go about obtaining the same?

Plan sponsors and administrators rarely need such credentials. They are generally required only by the people who actually submit and transmit the electronic forms through the FIRE system. Transmitters are needed to create a unique FIRE account to obtain a TCC code for the e-filing transmissions. If they already own a FIRE account, all they need is an extra TCC code specially to be used for submitting Form 8955-SSA. However, administrators will need to setup a FIRE account and get a TCC if a third-party service provider isn’t employed.

Accepting scans, faxes or copies of signatures on Form 8955-SSA

The IRS accepts the above with original pencil signatures as well.

Listing of amounts in dollars on Form 8955-SSA

Rounding off an amount less than 50 cents to the lower amount and increasing an amount above 50 cents to the next dollar is allowable on the form and must be done so for all amounts.

Answering Question No. 8 on Form 8955-SSA with a “Yes”

The question asks if the administrator supplied each member with a statement regarding the material required in the 8955-SSA. An administrator may go ahead with a “yes” to the question if the abovementioned information was given to the member in any other form apart from a distinct statement, which is not required. He may also respond with a “yes” to the question if documents given to the participants include the plan name, the administrator’s address, the participant’s name and the nature, value and the type of overdue assigned benefit to which the member is titled.

Length of the Form 8955-SSA

Since Adobe doesn’t print forms which are more than 200 pages in length, the next option would be to go in for printing the form in lots or opt for the e-filing using the FIRE system.

Missing the deadline of filing for Form 8955-SSA

Submit all the required documentation and the form as soon as you can even if it is after the deadline.

Penalty along with the late filing of Form 8955-SSA

The late filing at that time attracts no penalties. If and when it is evaluated, the IRS will contact the required person.

Is there a defaulting filers program for all those who filed Form 8955-SSA later than deadline?

As of now, there exists no such program.

What are the likely penalties that need to be paid with respect to the filing of Form 8955-SSA?

The 4 possible penalties include situations where the administrator:

  • Fails to file the yearly registration statement including all members; wherein the fine is $1 per member not reported per day multiplied by the number of days of failure continuation, upto a limit of $5000.
  • Fails to report a change in plan status including name, address, or administrator change. The fine is $1 per member not reported per day multiplied by the number of days of failure continuation, up to a limit of $1000. The correct way to notify any changes is for the plan administrator to do so while completing the Form 5500 and 8955-SSA.
  • Fails to give the plan member the Form before its submission or supplies him/her inaccurate information. The penalty for the same is $50 per failure per member which is levied on the person whose job is to provide the statement or who has submitted the inaccurate information.
  • Files the Form 8955-SSA later than the prescribed date of filing including any documents he/she supplies for extension with reasonable cause. The fine levied is $25 per day of failure continuation.

The above fines are relaxed if and only if the administrator or the person responsible is able to show reasonable cause of failure to perform the task for which he/she is being penalized.

What’s different this year?

In 2012 (with the change continuing), the SSA decided that it would no longer process non-standard pages, i.e., it would accept nothing else, not even an attachment, apart from the form itself. Additional pages, which have been included in the Form from 2012 onwards, have been designated for extra use, with the request to not add or attach any spreadsheets or other non-standard formats.

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8955-SSA Software for Filing New IRS Form 8955-SSA

November 8th, 2013 No comments

Businesses oftentimes have a pension or an arrangement to provide retired employees with regular income when they are no longer working.  Pension benefit plans must generally file Form 5500, Annual Return/Report of Employee Benefit Plan, to report their financial condition, investments and operations. The IRS has announced that Form 5500, Schedule SSA has been replaced by Form 8955-SSA, Annual Registration Statement Identifying Separated Participants With Deferred Vested Benefits. Plan administrators must file this new form with the IRS and not through the EFAST2 filing system. 8955-SSA software at the site 1099fire.com makes it easy to file IRS Tax Form 8955-SSA by paper or electronically.  Service bureau and mail house solutions are also available.

Paper Filing, Electronic filing, Service Bureau…

Form 8955-SSA can be filed by paper or electronically to the IRS. “Our 8955-SSA software makes it easy to import participant information from Excel, print and electronically file IRS Form 8955-SSA quickly and easily”, said Erich J. Ruth, Technical Support for 1099FIRE.  A sample Excel template can be found on the website 1099fire.com which will import into the 8955-SSA software or technical support can guide you through the process of importing by phone or email.

If you file by paper, the plan sponsor and plan administrator must sign and date the form.  You then mail the signed form to the IRS.  Electronically filing does not require a signature at this time.

Electronic reporting of information returns eliminates the need to submit paper documents to the IRS.  Electronically filed information may be submitted to the IRS 24 hours a day, 7 days a week.  “Electronic filing of Form 8955-SSA is easy to do”, said  Ruth and  “The system is updated each year to reflect the format changes that are made by the IRS”. 1099FIRE software creates original, replacement, corrected and test files in the format required by the IRS for electronic transmission.

Filing information returns can be stressful. 1099FIRE can eliminate the stress of filing information returns by electronically filing in a timely manner and at an affordable price. 1099FIRE will beat any competitor price; attain a quote for any service from any competitor and 1099FIRE will provide same, if not more complete, service at a lower price.

Visit the 1099FIRE website at www.1099fire.com to stay up-to-date with important news, tax deadlines and the latest in compliance information.

Due Date…

The 2009 and 2010 filing of Form 8955-SSA was originally due August 1, 2011. The new due date for filing both the 2009 and 2010 Form 8955-SSA is the later of:

(i) the due date that would otherwise apply to the 2010 Form 8955-SSA; or

(ii) January 17, 2012.

A form 8955-SSA filing is due the last day of the seventh month following the last day of the plan year.

About 1099FIRE…

1099FIRE is dedicated to providing feature-rich 1042-S, 1097-BTC, 1098, 1099, 3921, 3922, 5498, 8027, 8955-SSA, W-2G and W-2 software.  Import, print and eFile 1099 forms the quick and easy way!

1099FIRE is a market-leading provider of information-reporting solutions and services for 1099, W-2 and 1042-S filers. 1099FIRE develops and markets a comprehensive range of products that enables any size business or institution to effectively comply with all 1099, W-2 and 1042-S filing requirements.

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