Schedule SSA Becomes Form 8955-SSA – Confused Yet?

Posted by Stacey Snyder, EBP Audit Intern

With the recent change by the Department of Labor (DOL) to require electronic filing of the Form 5500 through EFAST2, a revision of Schedule SSA was inevitable, since the form includes personal information and is open to public disclosure. The new Form 8955-SSA is effective for reporting years starting in 2009.

Form 8955-SSA is to be filed directly with the Internal Revenue Service (IRS), either by mail or electronically through IRS FIRE.  The IRS sends the form to the Social Security Administration, which then reminds retired employees who were listed on a Form 8955-SSA of retirement benefits that they may be able to collect.

This new form is similar to the Schedule SSA, in that the employer must report any employee who has terminated employment and has a deferred vested benefit with the employer’s plan.  A terminated employee with a deferred vested benefit must be reported no later than on the Form 8955-SSA that is filed for the first plan year following the plan year in which the employee terminated employment.  The employer can elect to report the terminated employees on the Form 8955-SSA for the same year in which the employees were terminated.  For multiemployer or multiple employer plans, participants with deferred vested benefits must be reported on the Form 8955-SSA filed for the plan year in which the participant incurs the second of two successive one-year breaks in service.  If an employee has returned to work, collected the benefit or forfeited the benefit before he is required to be reported on the Form 8955-SSA, there is no need to report that employee.

If you are familiar with Schedule SSA, this should not be confusing.  Well, maybe just a little confusing.  There was a delay in releasing the new form — the 2009 form was released in late June of 2011, and the 2010 form in early November of 2011.  Because of this delay, a calendar year plan that would otherwise have had a 2010 filing due date of August 1, 2011 or October 17, 2011 (if a proper Form 5558 extension was filed), now has until January 17, 2012 to “timely file” the form 8955-SSA.  The form’s regular due date is the last day of the seventh month following the last day of the plan year — the same deadline as the old Schedule SSA and the Form 5500.  However, employers whose year end is March 31, 2011 or later will be expected to file by the regular due date unless an extension has been filed.

The IRS has previously given employers three options for filing this form:

  1. Listing all employees required for reporting for both 2010 and 2009 on a 2009 form
  2. Filing two 2009 forms, one for 2009 and one for 2010 (which must have the correct plan year written on the top of the form)
  3. Waiting for the 2010 form to be released

Now that the 2010 form has been released, there has been a lot of confusion concerning the filing of the 2010 form, mainly because many sponsors have already selected options 1 or 2 above.  The good news is, the IRS has stated that another 2010 form does not have to be filed if it was already filed on the 2009 form.  In addition, employers are still permitted to use the filing options as stated above for the 2010 plan year.

As mentioned above, the Social Security Administration advises employees who were reported on a Form 8955-SSA that they may have a retirement benefit due from the employer when they reach retirement age.  If, after being reported on a Form 8955-SSA, an employee is paid out, the employer must report that the participant no longer has a benefit.  If the employer does not report the cash-out, the employee will show up many years later wanting to be paid. It could be very difficult for the employer to prove that the employee was, in fact, paid his benefit.

THAT could be confusing!