Ask the Experts June 7, 2011

(b)lines Ask the Experts – New Form 5500 SSA Schedule

June 7, 2011 (PLANSPONSOR (b)lines) – “I read in a recent Ask the Experts Column on small/frozen Plan 5500 filings that there is a new Form 8955-SSA IRS filing requirement for 403(b) plans. However, I checked the Forms and Publications section of the IRS Web site and the form is nowhere to be found?”

Reported by

Michael A. Webb, Vice President, Retirement Services, Cammack LaRhette Consulting, answers:

Indeed, you have identified what could be a potential issue with Form 8955-SSA, a new form that is required to be filed with the IRS directly (and NOT via the DoL/EBSA EFAST system for 5500 filings). The form, formerly known as Schedule SSA of Form 5500, is used to report participants who have terminated employment in a plan year and left assets on deposit in their employer’s retirement plans, is filed by any plan that is required to file a Form 5500, even small plans with under 100 eligible participants, so non-ERISA plans do not have to be concerned with it.

The purpose of the form is so that participants are reported to the Social Security Administration, which then notifies the participants of the possible existence of such assets when they file for benefits. For 403(b) plans in particular, this filing can raise significant issues as to what former employees may still have amounts held in legacy accounts or contracts that have not been distributed.

The former Schedule SSA requirement, which was part of the overall 5500 filing requirement for ERISA plan sponsors (but NOT for 403(b) plan sponsors prior to 2009), disappeared once 5500’s were required to be electronically filed under the DoL/EBSA’s EFAST system for the 2009 plan year. The reason for this occurrence is that the forms contained Social Security numbers, which, given the fact that all EFAST filings are made available to the public, created obvious privacy concerns.

To alleviate this issue, the IRS drafted a replacement form (Form 8955-SSA) last year, but too late to include in the 2009 5500 filings. After some interim guidance, the IRS released the final draft of the 2009 Form 8955-SSA on May 2, with an FAQ that clearly stated that the 2009 form could be used to report information for the 2009 and 2010 plan year (since the 2010 Form-SSA has yet to be released in any form as yet). However, as of this writing, no final instructions have been released, nor has a final version of the form that is suitable for filing been released.

IRS Announcement 2011-21 is the most recent IRS promulgation on this new form. It is not currently clear whether any special exemptions may apply to reporting legacy 403(b) contracts on the Form 8955-SSA when it is finalized.

In light of this, several industry organizations have requested that the filing deadline be extended to at least six months following the publication of the final form and instructions (see ASPPA Proposes Extension for Form 8955-SSA Filing). As it stands, however, the filing deadline of the form is the same as the 2010 5500: August 1, 2011 for calendar year plans. The deadline can be extended by filing Form 5558 to October 17, 2011.

Of course, if the deadlines change, (b)lines will keep you posted as to any developments, and the Experts will also be prepared to discuss this issue at the upcoming Plan Sponsor National Conference in Chicago at a special “Ask the Experts” Q&A session on Wednesday June 15th (Day 2 of the Conference) at 1:30 p.m. Central Time. See you at the Conference!

NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.