Qualified retirement plans and ERISA 403(b) plans must comply with a new IRS filing requirement by August 1, 2011. Yes, you read that right...a new form must be filed, and the deadline is only 6 weeks away.
In short, plans must file the new IRS Form 8955-SSA to report terminated participants with remaining plan balances. The new Form replaces the Schedule SSA that was eliminated in 2009. You may be wondering why you are just now hearing about this...because the IRS only released the new Form and filing instructions on Saturday, June 18, 2011.
DWC Is Going To Help, Right?
Absolutely! DWC will automatically prepare the Form 8955-SSA for any active client for which we provided/are providing 2010 compliance and reporting services. Depending on the records we have on file, DWC may need to contact you for additional information.
For clients who first engaged DWC for the 2011 plan year, we are available to prepare the Form on request; however, you must contact us no later than Friday, July 15th if you would like us to prepare the Form for your plan.
What Information Must Be Reported?
The Form requires the filer to report any participant who terminated in a prior year and is still due a vested benefit from the plan as of the reporting date. For each participant who must be reported, the Form must include the social security number, name and the vested benefit amount.
Example: The 2010 Form must report participants who terminated in 2009 and still have balances at the time of filing. As an option, the 2010 Form could also include those who terminated in 2010.
In each subsequent year, any previously reported participants who have received distributions must be reported again with a code indicating the plan no longer owes them further benefits.
How Is The Information Used?
The information is shared with the Social Security Administration (the "SSA") who maintains it in a database. When individuals apply for Social Security benefits, SSA queries its database and notifies applicants that they are entitled to benefits from the plan.
What Is The Filing Deadline?
Although it is a completely separate filing, the deadline to file is the same as the Form 5500 deadline, i.e. seven months after the close of the plan year. This deadline can be extended by an additional two months by filing Form 5558. The initial Form 8955-SSA filing is due August 1, 2011 and must cover both the 2009 and 2010 plan years; however, the information for both years can be combined on a single Form rather than filing two different Forms.
Industry organizations (of which several of DWC's employees are members) have requested that the IRS automatically extend the deadline; however, it is unclear whether any relief will be granted. For now, DWC is proceeding as if the regular deadline applies.
Will There Be A Fee For This?
DWC anticipates charging a nominal fee for preparation of the signature-ready Form. Since this Form is mandatory, the fee can be paid by the plan.
How Do I File?
At present, the IRS allows both electronic and paper filing. Since the 8955-SSA is separate, stand-alone form, filing it electronically will require a another set of credentials. The final Form was only published on Saturday, so DWC has not yet had an opportunity to test the e-filing system; however, it is likely that for this initial year, the short deadline will make paper filing the more practical option. We will provide additional information as we learn more.
Where Can I Find Out More?
If you have questions about the Form 8955-SSA filing requirement, please contact DWC at 651.204.2600. The IRS has also posted an FAQ on its website at http://www.irs.gov/retirement/article/0,,id=238940,00.html.
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