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Form5500help.com is designed to complement official guidance and other internet resources available to preparers of Form 5500 for qualified retirement and welfare benefit plans.

Every year, businesses and organizations that sponsor an employee benefit plan subject to ERISA must file Form 5500. These forms are filed with the Employee Benefits Security Administration’s EFAST operation in Lawrence, Kansas without regard to the plan year. All current, late, or amended filings are processed by EFAST.

Plan sponsors and practitioners -- employee benefit consultants, accountants, attorneys, and other service-providers -- often find the instructions to the Form 5500 to be vague or ambiguous resulting in many hours of frustration while preparing the reports for both pension and welfare benefit plans. Form5500HELP.com offers practical advice to consider when completing the various forms and schedules associated with these filings.

We also lead you to other websites so you can

  • quickly download forms,
  • locate official regulations and other guidance,
  • find software to simplify preparation,
  • print copies of forms already on file with the Internal Revenue Service and the Employee Benefits Security Administration, and much more.

New Form, New Website Functions:
IRS is Busy!
Posted:  October 23, 2014

It’s the time of year when I am working on the next update to the Form 5500 Preparer’s Manual. Several items have come to my attention that I think may be of interest to users of this website.

Directory of Federal Tax Return Preparers
The latest instructions for Form W-12 (IRS Paid Preparer Tax Identification (PTIN) Application and Renewal) were issued this month (October 2014). The content of the form is consistent with prior years for the most part, although it has been rearranged from the prior version.

In the What’s New section of the instructions, however, there is mention of a new public listing of federal tax return preparers that IRS plans to launch on its website no later than January 2015. This directory will be a searchable database that includes the name, city, state, and zip code of PTIN holders who are attorneys, CPAs, enrolled agents, enrolled retirement plan agents, enrolled actuaries, as well as individuals who successfully complete the requirements to participate in the Annual Filing Season Program. This information is being made available under the Freedom of Information Act (FOIA). You can find more information at www.irs.gov/ptin

Form 5500-SUP
IRS hosts a draft tax form web page that I check every morning. Well, almost every morning. This week, one of the items posted was a draft Form 5500-SUP, sporting a 2015 year. [click here] Related instructions have not been posted just yet but will be added here when available.

Buried in the final regulations that require electronic filing of [certain] Forms 8955-SSA, 5500-EZ, and Schedules MB/SB (see article posted September 30, 2014 below) was a mention that IRS was composing a form that would supplement data already collected on Form 5500 series reports. Using the same logic that translates into mandatory e-filing of the abovementioned forms, IRS has decided it can collect compliance data that it previously thought could not be part of the Form 5500 series because it did not have the authority to collect such data electronically.

Apparently, IRS has solved its own dilemma! Sure, IRS may not be able to mandate electronic filing for everyone, but the 250 return threshold it used to require other forms be filed on magnetic media can be imposed on the new Form 5500-SUP, too. Some small plan filers may have the option to file on paper but service providers may conclude that it’s smarter from a business perspective to have all clients on the same regimen.

The content of the form is another matter. As you look over the form, keep in mind that if it is filed electronically as part of the Form 5500 series report, it [likely] will be subject to public disclosure. And, lacking the draft instructions, the form itself does not indicate that any of the information is “optional,” right down to the preparer’s name, address, and phone number.

While I can understand why IRS is gathering this type of information, the data collection will not be simple. Stay tuned!

IRS Requires Electronic Filing of
[Certain] Forms 8955-SSA, 5500-EZ, and Schedules MB/SB

Posted:  September 30, 2014

In early September 2014, IRS posted an updated Retirement Plan Reporting and Disclosure Requirements [click here] document that indicated, on page 3, that certain 2014 Form 8955-SSA and 2015 Form 5500-EZ filings were required to be filed electronically. At that time, it had not finalized the regulation it had proposed on August 30, 2013 in which mandatory electronic filing rules for these reports were first introduced.

It should be noted that the draft 2014 Form 8955-SSA [click here] and its instructions [click here], posted in August 2014, make no mention of the electronic filing mandate that may apply to such filings.

Now, the Treasury has released the final regulations for employee benefit plan returns that are required to file on so-called magnetic media (i.e., electronically). [click here] The preamble notes that IRS does not have the capability to accept electronic filings of delinquent Form 8955-SSA or Form 5500-EZ that are being submitted under either Notice 2014-35 or Rev. Proc. 2014-32, respectively. [See the articles posted May 12, 2014 below.]

Background
IRC §6011(e)(2) generally allows the IRS to require the filing of returns on magnet media when 250 or more returns are filed by the same person. The regulations count all federal filings of the “person” toward the 250 threshold.

The plan administrator is responsible for filing Form 8955-SSA and the Schedules MB/SB (Form 5500), while both the plan sponsor and plan administrator are responsible for filing Form 5500-EZ. Therefore, where the plan sponsor is also designated as the plan administrator, the capacity in which the filer acts is irrelevant. For example, the 250 threshold is met by counting all Forms W-2, 1099, 941, 1120, 5500, 945, and other federal filings of the plan sponsor (that is also the plan administrator).

This broad interpretation will lead many service providers to conclude that it’s more expedient to treat all filers as subject to the new mandate rather than devote resources to determining which filers are affected. Why make this assumption? If a filer that is required to file electronically fails to do so, the filer is deemed to have failed to file.

Where a committee or individual is specifically named as plan administrator, the 250 filing threshold is separate from that of the plan sponsor. However, service providers are likely to ignore this distinction in setting procedures and, again, may transition all plans to the e-filing process to better manage their operations.

2014 Form 8955-SSA E-Filing Mandate
The new rules apply to any Form 8955-SSA for a plan year that begins on or after January 1, 2014 for which the filing is due (not taking into account extensions) on or after July 31, 2015. It is worth noting that nearly 43% of Form 8955-SSA filings made during 2013 were made electronically, even without the mandate.

The IRS system known as FIRE (Filing Information Returns Electronically) is used to make electronic submissions of Form 8955-SSA. The IRS currently has no specific plans to make certain improvements to the system that might better accommodate those who have a large volume of filings to submit, although the preamble to the final regulation notes that [ASPPA’s] comments on possible FIRE system improvements have been forwarded to the staff at IRS responsible for that system.

2015 Form 5500-EZ Filing Mandate
The electronic filing mandate is pushed off to plan years that begin on or after January 1, 2015 for filings with a due date (not taking into account extensions) after December 31, 2015. In preparing for this shift, the draft 2014 Form 5500-EZ [click here] and its instructions [click here] for the first time permit foreign plans and those one-participant plans that cover more than 100 participants to file Form 5500-SF through EFAST2 as an alternative to submitting a paper Form 5500-EZ.

Filings submitted to EFAST2 under this requirement will not be posted on the DOL’s electronic public disclosure website so long as the one-participant or foreign plan boxes are properly checked on the Form 5500-SF.

Mandatory Electronic Filing of Actuarial Schedules MB/SB
Beginning with 2009 plan years, filers of Form 5500 series reports generally submitted any required actuarial schedules electronically through EFAST2. An exception permitted one-participant retirement plans and foreign plans to merely collect and retain such information and did not require the schedules to be part of their Form 5500 filing.

Rest assured the new regulation continues to relieve one-participant plan and foreign plan filers of attaching the actuarial schedule to their Form 5500 series filing. The electronic mandate for actuarial schedules is effective for plan years that begin on or after January 1, 2015 for filings with a due date (not taking into account extensions) after December 31, 2015.

IRS Changes the Rules
for DFVC Relief Available to Late Form 5500 Filers
Posted:  May 12, 2014

This is tricky. The Delinquent Filer Voluntary Compliance (“DFVC”) program put into place by the DOL in 1995 was subsequently updated in March 2002. Following suit, the IRS issued Notice 2002-23, which said that the Service would not pursue its own separate late filer penalties on filers who met the requirements of the DFVC.

Now, IRS has issued Notice 2014-35 [click here] to supercede that original Notice 2002-23. By doing so, the Service is stating that the only way to get relief for late filing penalties that IRS may separately impose on a late Form 5500 filing submitted under DFVC is if the related Form 8955-SSA, if applicable, is also filed.

This relief does not apply to late filings of Form 8955-SSA if the related Form 5500 is not submitted under DFVC. There’s a disconnect here, and it is intentional.

Here’s the bottom line -

  • The Notice only provides relief for filers who file under DFVC. Filers who are only delinquent with regard to a Form 8955-SSA report may still seek relief for reasonable cause.
  • Relief under DFVC from IRS penalties for late filings of Form 5500 is only applicable if the Form 8955-SSA is also filed, assuming one is required for the year.
  • Such late filings of Form 8955-SSA must be made on paper and may not be made electronically through FIRE. The filer should check the box on Line C, Part I (special extensions) and enter “DFVC” in the space provided.

Any Form 8955-SSA required to be filed as part of a DFVC filing must be filed on paper by the later of 30 calendar days after the filer completes the DFVC filing or December 1, 2014. IRS says it will coordinate with DOL to determine which late filers of Form 8955-SSA are eligible for the relief provided under this notice.

Practitioners should take a look at all DFVC filings prepared in the past few years to determine whether a Form 8955-SSA filing must be made in order to lock in the DFVC relief under this Notice.

Finally! Temporary Late Filer Relief
for Form 5500-EZ Filers

Posted:  May 12, 2014

The IRS has been listening to us! Now, certain late filers of Form 5500-EZ can escape late filer penalties under Revenue Procedure 2014-32 [click here].

Effective June 2, 2014, the program is available to late filers of Form 5500 series reports for one-participant plans and certain foreign plans by submitting late filings to IRS following the rules outlined below. It should be noted that:

  • No penalty or other payment is required to be paid under the pilot program.
  • If a late filing has already been submitted, the relief provided under this revenue procedure is not available if the filer has already received a CP 283 Notice from IRS, in which a penalty has been assessed.
  • In lieu of the relief provided under the procedure, filers may continue to request relief from late filing penalties due to reasonable cause.
  • The pilot program ends June 2, 2015.

Who is eligible for the relief?
The relief under the Rev. Proc. is available only to the plan administrator or plan sponsor of (1) certain one-participant plans, as that term is defined in the Instructions for Form 5500, and (2) certain foreign plans.

A one-participant plan is a retirement plan that covers one or more participants who are the only owner of the entire business (or the owner and the owner’s spouse) or one or more partners (or partners and their spouses) in a business partnership. Such plans do not provide benefits for anyone except the owner (or the owner and the owner’s spouse) or one or more partners (or partners and their spouses). It should be noted that under Section 1103(a)(2)(E) of PPA 2006, the term partner was modified to include an individual who owns more than 2 percent of an S corporation.

A foreign plan is a retirement plan maintained outside the United States primarily for nonresident aliens and is eligible for relief under the Rev. Proc. if the employer than maintains the plan is a domestic employer or a foreign employer with income derived from sources within the U.S. (including foreign subsidiaries of domestic employers) that deducts contributions to the plan on its U.S. income tax return.

What must be filed?
To qualify for the late filing penalty relief, only paper filings will be accepted. What must be filed depends on the year(s) involved and the type of plan. Unlike the DOL’s delinquent filer program, the form for the actual plan year must be used (rather than a current year form). So, if the late filing involves a 2004 plan year, the filer must locate a 2004 Form 5500 series return. IRS points to www.irs.gov/retirement or http://www.dol.gov/ebsa/5500main.html as sources for prior year returns. Practitioners may have software for those old years that enables them to easily generate filings for signature and submission to IRS without looking for paper copies.

2008 Plan Years and Earlier
The specific Form 5500 series return that was required for the plan year must be submitted. It should be noted that, for 2005 and earlier plan years, a one-participant plan (or combination of plans) with less than $100,000 of total plan assets at the end of the plan year were not required to file Form 5500 series reports. Thereafter, PPA 2006 set the threshold as $250,000 or less at the end of the plan year and requires filings only for years in which that dollar amount is met.

In addition, filers should recall that one-participant plans covering more than 100 participants or that were combined with another plan for coverage testing purposes were required to file Form 5500, and not Form 5500-EZ, prior to 2009.

2009 and Later Plan Years
Only the Form 5500-EZ appropriate for the plan year may be submitted; therefore, a delinquent Form 5500-SF may not be filed through the EFAST2 system (or on paper) under this pilot relief program.

Plans with Actuarial or ESOP Schedules
For plan years prior to 2005, a Schedule B (Actuarial Information) must be included with a Form 5500 series report for any non-Title 1 defined benefit plan and certain money purchase plans.

For plans years after 2005, a Schedule B (or Schedule SB, its successor) was not required to be filed by such plans and so is not part of the requirements for this program. However, an applicant must include in the submission a representation that the applicable annual actuarial report has been prepared and the statement must be attached to the return in lieu of the Schedule B (or Schedule SB).

ESOP sponsors must include Schedule E (ESOP Annual Information) for plan year filings prior to 2005.

How to File
The Revenue Procedure stresses that all of the following steps must be taken. Failure to follow these steps may cause the IRS to treat the return as ineligible for the program’s relief and to assess late filing penalties. The Service notes that multiple returns may be included in a single submission, whether for a single plan or for multiple plans of the same employer.

a. Any late filing filed under the pilot program must be submitted on paper.
b. In addition, the applicant must mark in red letters in the top margin of the first page (above the title of the form) of each late filing:

DELINQUENT RETURN SUBMITTED UNDER REV. PROC. 2014-32,
ELIGIBLE FOR PENALTY RELIEF

c. Each late filing must include a cover sheet which is a completed paper copy of the Transmittal Schedule that appears in the Appendix to the Rev. Proc. [click here]. It must be attached separately to each late filing. For example, if four delinquent returns are included in the same submission, a separate Transmittal Schedule must be completed and attached to the front of each of the four returns.

Where to File
While a bit unusual, the IRS requires those taking advantage of this program to mail filings to different addresses depending on whether the applicant is submitting a Form 5500 or a Form 5500-EZ. Certain plans covered by this Rev. Proc. were required to file Form 5500, rather than Form 5500-EZ, for plan years beginning before 2008. For example, foreign plans were required to file Form 5500 as were certain one-participant plans described earlier.

Form 5500-EZ Submissions should be mailed to:
Internal Revenue Service
1973 North Rulon White Blvd.
Ogden, UT 84404-0020

Form 5500 Submissions should be mailed to:
Internal Revenue Service
Employee Plans Delinquent Filer Program
EP Classification
9350 Flair Drive
El Monte, CA 91731-2828

The usual private delivery services may be used. These include DHL, FedEx, and UPS.

Conclusion
This pilot programs runs through June 2, 2015. Returns submitted after that date will not be entitled to the relief provided in this guidance; however, IRS will permit such filers to continue to request relief for reasonable cause.

In addition, the Service is soliciting input as to whether the pilot program should be replaced with a permanent program after June 2, 2015. Any permanent program will include a fee similar to the DOL’s DFVC program.

This is welcome relief although, as with any governmental program, it may take some time to get the word out to those who need the relief and allowing them sufficient time to file by June 2, 2015. It’s my strong belief that the program should be made permanent -- any Form 5500-EZ late filer I’ve worked with over the years would have been happy to pay fees similar to those of the DOL’s late filer program (applicable to small plan late filers) just to have closure on the matter.

Clarification of Form M-1 Attachment
to the 2013 Form 5500

Posted:  January 12, 2014

In the 2013 Form 5500 Series Official Release article posted below (on December 13, 2013), we discuss the new requirement for all welfare plan filings to include a special attachment. There seemed to be some ambiguity in the official instructions (see page 18 of the 2013 Instructions for Form 5500 [http://www.dol.gov/ebsa/pdf/20135500inst.pdf] ) so I reached out to the Department of Labor for comment.

Here’s what I learned:

  • Any 2013 Form 5500 report that shows a plan number of 501 or greater at line 1b must include the attachment.

  • Any 2013 Form 5500 filing for a retirement plan that shows a welfare plan feature code at line 8b (e.g., code 4B to indicate that life insurance is available under the plan) does not need to provide the attachment.

  • Any small welfare plan that is required to file a Form 5500 (generally, because it is a funded plan),
    • Must file Form 5500 if the plan is also required to file Form M-1;
    • If not required to file Form M-1 and is otherwise eligible, may file Form 5500-SF. No attachment to report Form M-1 compliance is needed for a Form 5500-SF filer.

This Form M-1 compliance item will be incorporated into the 2014 Form 5500 thereby eliminating the attachment for subsequent years.

Who Must Sign Form 5500?
Posted:  January 9, 2014

This question has come at me from several angles recently, so it may be helpful to have the rules clearly laid out.The starting point is page 6 of the 2013 Instructions for Form 5500.

Let’s break this down by authority:

  • The plan administrator must sign and date a Form 5500 filed for a retirement or a welfare plan under ERISA §104 or 4065 (or both).
  • Either the plan administrator or the employer (plan sponsor) may sign and date a Form 5500 filed for a retirement plan under IRC §6058. Generally, a Form 5500 filed for a pension plan is filed under both ERISA §104 and IRC §6058.

So, most filings require only the signature of the plan administrator. That said, there may be a preference on the part of the plan administrator and employer to affix both signatures when those are separate persons.

For EFAST2 purposes, only the electronic signature of the plan administrator is necessary to process the filing. See FAQs 30-34 at http://www.dol.gov/ebsa/faqs/faq-EFAST2.html.

There are several exceptions to the rules outlined above. First, when a joint employer-union board of trustees or committee is the plan sponsor or plan administrator, at least one employer representative and one union representative must sign and date the Form 5500. Generally, these are collectively bargained plans and may be single employer or multiemployer plans.

Another exception applies for Form 5500 reports submitted by direct filing entities (DFEs). Here, the filer signs not as the plan administrator or sponsor, but as the DFE on the separate signature line provided on the face of the Form 5500.

2013 Form 5500 Series Official Release
Posted:  December 13, 2013

On December 5, 2013, the Department of Labor (DOL) announced the official release of the 2013 Form 5500 series forms and instructions. [See http://www.dol.gov/ebsa/5500main.html]. The 2013 Forms 5500-EZ and 8955-SSA have not been finalized at this time; however, the draft 2013 forms and instructions were posted in the Draft Tax Forms section of the IRS web site in August 2013.

The most important changes to the forms and instructions are noted below.

All Welfare Plan Filings Require Special Attachment
On March 1, 2013, the DOL issued final rules incorporating new provisions of the Patient Protection and Affordable Care Act (the “Affordable Care Act”), which included revisions to the 2013 Form 5500. Although the rule affects Multiple Employer Welfare Arrangements (MEWAs), the new Instructions for Form 5500 make it clear that a 2013 Form 5500 filed for any welfare plan must include the attachment.

It should be noted there is no mention of this requirement on the 2013 form itself; instead, welfare plan filers must refer to page 18 of the official instructions. The attachment to Form 5500 must state the following:

  • Whether the welfare plan was subject to the Form M-1 filing requirements during the plan year;
  • If so, whether the plan is currently in compliance with the Form M-1 filing requirements; and
  • Report the Receipt Confirmation Code for the 2013 Form M-1 annual report. If the plan was not required to file the 2013 Form M-1, the receipt code for the most recent Form M-1 that was required to be filed should be displayed.

CAUTION: Failure to attach the statement described above will subject the Form 5500 filing to rejection as incomplete and civil penalties may be imposed.

Changes Affecting Defined Benefit Plan Filers
In the past, defined benefit plan Form 5500 filings have shown Plan Characteristic Code 1G at line 8 of Form 5500 (line 9 of Form 5500-SF) to indicate that the plan was covered under the PBGC termination insurance program. The 2013 Form 5500 series removes this code and creates a new item 5c on Schedules H and I (6c on the Form 5500-SF) to elicit this data.

c If the plan is a defined benefit plan, is it covered under the PBGC insurance program
(see ERISA 4021)? [ ] Yes [ ] No [ ] Not determined

The Schedule SB instructions (page 64) have been updated to reflect the provisions of the Moving Ahead for Progress in the 21st Century Act (MAP-21). The Schedule SB instructions for line 11b also have been clarified for plans where the valuation date for the prior plan year was not the first day of the plan year (see page 67).

Some Business Codes Revised (Line 2d)
It went unnoticed by many preparers that the 2012 Instructions for Form 5500 included some changes to the business codes that could be reported on line 2d of either Form 5500 or Form 5500-SF. Fortunately, the EFAST2 system did not edit test that item on 2012 filings.

However, the 2013 Form 5500 series filings will not accept unavailable codes. The following codes have been affected:

Removed:
441221 (Motorcycle Dealers)
441229 (All Other Motor Vehicle Dealers)
443111 (Household Appliance Stores)
443112 (Radio, Television, & Other Electronics Stores)
443120 (Computer & Software Stores)
443130 (Camera & Photographic Supplies Stores)
451220 (prerecorded Tape, Compact Disc, & Record Stores)
454311 (Heating Oil Dealers)
454312 (Liquefied Petroleum Gas (bottled gas) Dealers)
454319 (Other Fuel Dealers)
531114 (Cooperative Housing (including equity REITs)
722210 (Limited Service Eating Places)

New:
441228 - Motorcycle, ATV, and All Other Motor Vehicle Dealers
443141 - Household Appliance Stores
443142 - Electronics Stores (including Audio, Video, Computer, and Camera Stores)
454310 - Fuel Dealers (including Heating Oil and Liquefied Petroleum)
524130 - Reinsurance Carriers
722513 - Limited-Service Restaurants
722514 - Cafeterias and Buffets
722515 - Snack and Non-alcoholic Beverage Bars

Changed:
Women’s & Girls’ Cut & Sew Apparel Mfg - 315240 (was 315230)
Other Cut & Sew Apparel Mfg - 315280 (was 315290)
Full Service Restaurants - 722511 (was 722110)

2009 Form 5500 Obsolete as of January 1, 2014
Beginning January 1, 2014, the EFAST2 system will no longer process 2009 Form 5500 filings, including amendment of previously filed 2009 Form 5500 series.

Have a late filing? Need to amend a previously filed 2009 Form 5500 report? Such filings must be submitted using the 2013 Form 5500, schedules, and instructions (but use the 2009 version of Schedules R, SB, and/or MB and complete in accordance with the 2009 instructions). See EFAST2 FAQ 4 and the Form 5500 Selection Tool (http://www.dol.gov/ebsa/faqs/faq-EFAST2.html) which will be updated soon.

It’s worth noting that such submissions will not appear on the DOL’s Public Disclosure web page. If an amended 2009 plan year filing is submitted on a 2013 form and contains the RefAckId (that’s the 30-digit Acknowledgment ID that appears when a Form 5500 is accepted on the EFAST2 system) of a filing previously submitted on the 2009 form, the amended filing takes the place of the previous filing in the EFAST2 system. The previously filed 2009 Form 5500 filing will no longer appear on the Public Disclosure web page but neither will the amended filing submitted on the 2013 Form 5500. Consult with your software provider to determine how to make sure the appropriate RefAckId appears in the file being submitted to EFAST2.

Any 2009 Form 5500 reports filed with EFAST2 before January 1, 2014 will continue to be displayed on the Public Disclosure page.

New Round of DOL Inquiry Letters
Posted:  May 16, 2013

The U S Department of Labor’s Office of the Chief Accountant (OCA) has begun sending correspondence -- both by paper and email -- asking the plan sponsor whether it also sponsors a health benefit plan. The letter reminds filers that certain employee welfare benefit plans must file Form 5500.

These inquiries are being directed to filers of 2011 Form 5500 for retirement plans, without regard to whether the retirement plan is a small or large plan. The correspondence asks the addressee to provide "information to determine whether you were required to file form 5500 for a health benefit plan for 2011."

While a response is required within 15 days from the date of the letter, it should be noted that the letter is not a specific notice to administrators that their filings are delinquent. As such, sponsors discovering any delinquent welfare benefit plan filings may take advantage of the DOL’s Delinquent Filer Program (DFVCP). See http://www.dol.gov/ebsa/calculator/dfvcpmain.html

The OCA is determined to get 100% response, so it’s important to reply promptly. It should be noted the letter is directed to the email address of the "signer" of the 2011 Form 5500 on the EFAST2 system; therefore, practitioners who file on behalf of the plan administrator may receive the notice instead of the affected plan sponsor.

2012 Form 5500 Series Official Release
Posted December 5, 2012. 

On December 4, 2012, the Department of Labor (DOL) announced the official release of the 2012 Form 5500 series forms and instructions. [See http://www.dol.gov/ebsa/5500main.html.] The 2012 Forms 5500-EZ and 8955-SSA have not been finalized at this time; however, the draft 2012 Form 8955-SSA and its instructions were posted in the Draft Tax Forms section of the IRS web site on October 5, 2012.

The most important changes to the forms and instructions are noted below.

Disclosure of Paid Preparer (Optional)
The signature line on the Form 5500-SF has been moved to the first page, making it more like the face of the Form 5500. The more important change appears just below the signature line, however, where the IRS has added an optional item to both forms to insert the paid preparer’s name, phone number, and address.

The optional nature of this line should not be taken lightly. Prior to 2009, the Form 5500 series included space at line 5 to indicate the name and address of the preparer. Practitioners who completed this line showed the name of the firm that prepared the filing rather than any specific individual.

The line that appears on the 2012 forms seeks the name of the paid preparer, not the firm responsible for preparation of the filing. A preparer may be reluctant to voluntarily provide this information on the 2012 report because information reported in this section is subject to public disclosure and available to the public under the Freedom of Information Act (FOIA). This consequence should not be taken lightly as it would allow the public to quickly and easily identify a preparer’s client list. In addition, plan participants and beneficiaries would be able to make telephone contact with the preparer, who may have little or no involvement in the day-to-day operations of the plan and, therefore, be unable to respond to questions about benefit eligibility and so forth.

It is safe to say that many preparers of Form 5500 would be uncomfortable with either consequence. For 2012, therefore, it may be advisable to leave this line blank.

Currently, the IRS is not authorized to collect information through electronic means and, therefore, cannot require this data be provided. That said, the inclusion of this optional item may signal the IRS’s intention to reconsider its current position that Form 5500 preparers are not subject to PTIN rules.

Signature Requirements
A random search of Form 5500 series filings will show why the DOL has added language to the instructions for the signature lines. It is common to find the name of the company, for example, in the space provided for the name of the individual signing as plan administrator and/or plan sponsor. What appears to have happened is that EFAST2 credentials have been established in the name of the company sponsoring the plan, rather than that of the individual authorized to sign the Form 5500 series report on behalf of the plan administrator or sponsor.

Such credentials should be updated to reflect the name of the person who is signing the form. This may be accomplished by accessing the EFAST2 credential profile or, alternatively, establishing new credentials for the individual signer(s).

Trust Information (Optional)
Schedules H and I have a new line 6a, while Form 5500-SF has a new line 14a, both intended to permit the filer to provide the name and EIN of the trust. This optional item is less controversial than the paid preparer item discussed above, and it is likely many filers will voluntarily provide this information. The data on this new line is similar to the information provided on Schedule P prior to 2006.

If a plan uses more than one trust or custodial account for its fund, the filer should enter the primary trust or custodial account, based on the greatest dollar amount or largest percentage of assets held as of the end of the reporting year. If no EIN has been assigned to the employee benefit trust or custodial account, the filer should enter the EIN that appears on any Form 1099-R issued by the trust to report distributions to participants and beneficiaries.

Caution! It is common for a bank, trust company, or insurance company to use a single EIN to report distribution information to participants on Form 1099-R for all plans serviced by the institution. In this case, it may be advisable to request a separate EIN for the trust being reported.

The Return of “Same as” Boxes
For the past few years, line 3a -- which identifies the plan administrator - -has been formatted in a way that required insertion of data rather than use of a check-box to indicate the plan administrator is the same as the plan sponsor information shown at line 2a. The 2012 forms show two boxes at line 3a. The first box is checked to indicate the plan administrator’s name is the same as the plan sponsor’s. The second box is checked to indicate the plan administrator’s address is the same as the plan sponsor’s. Alternatively, the information can simply be inserted at line 3a.

Actuarial Schedules MB and SB
Instructions to lines 4d and 4e (Information on Plan Status, page 53), and 9c (amortization charges under the funding standard account, page 56) of Schedule MB have been clarified. The Schedule SB instructions now request additional detail for the prior year’s excess contributions to be added to the prefunding balance (line 11b, page 67). Actuaries preparing Schedule SB also should reference IRS Notice 2012-61 for additional guidance on how to complete the 2012 Schedule SB in accordance with the Moving Ahead for Progress in the 21st Century Act (MAP 21).

January 1, 2013 EFAST2 Rollout
Filings for 2012 plan years may only be submitted on a 2011 Form 5500 series report through December 31, 2012. Beginning January 1, 2013, filings for plans with a plan year beginning in 2012 or 2013 must be submitted on a 2012 Form 5500 series report. Any filing submitted after December 31, 2012 on an incorrect year form will not be accepted by EFAST2. The DOL has created a Form Version Selection Tool for help in determining which version of the Form 5500 series report should be filed. See http://www.dol.gov/ebsa/5500selectorinstructions.html.

Prohibited Transactions Arising From ERISA §408(b)(2) Failures
The 2012 instructions are completely silent about how to report prohibited transactions that arise from the failure of a service provider to disclose information required under ERISA §408(b)(2). Large plan filers report prohibited transactions in Part III of Schedule G and line 4d of Schedule H. Small plan filers report prohibited transactions on Schedule I or in line 10b of Form 5500-SF. The excise tax associated with the prohibited transaction is reported and paid with Form 5330.

The DOL has developed a web page that enables plan fiduciaries to electronically notify the Department of such failures. See http://www.dol.gov/ebsa/regs/feedisclosurefailurenotice.html.

While the Form 5330 is currently being updated, IRS has indicated the forms and instructions scheduled for release in early 2013 do not include any mention of reporting service provider failures or calculation of tax due in those situations.

The IRS Clarifies Form 5558 Instructions 

For those of you who routinely monitor the Form 5500 Corner [http://www.irs.gov/retirement/article/0,,id=117588,00.html] on the IRS web site, this may be old news. On May 3, 2012, IRS posted new information about Form 5558, while a video posted January 17, 2012 explains how to complete the filing when reporting multiple plans on a single Form 5558.

Here is a recap of the issues IRS wants you to consider.

No Lists, Please
Form 5558 must be filed by the sponsor of each plan requesting an extension of time to file Form 5500 series, Form 8955-SSA or Form 5330. While IRS had permitted filers to attach a list of the single employer’s plans to Form 5558 in the past, when the most recent Form 5558 was released in July 2011, the instructions specifically eliminated this option. The current form provides three lines for listing plan name, number and year ending and no attachments are permitted.

The latest information on the Form 5500 Corner advises filers that lists attached to Form 5558 received through July 31, 2012 will result in those submissions being returned to the filer, who will be required to properly complete Form 5558 and resubmit Form 5558 for all plans requiring an extension of time to file. Apparently, some filers have been incorrectly submitting a single Form 5558 with a laundry list of unrelated plans for which an extension of time to file was being requested.

Any Form 5558 that includes a list that is received by IRS after July 31, 2012 will not be returned and will not be processed.

While the request to extend the time to file is automatically granted with respect to Form 5500 series returns and Form 8955-SSA, this is only true if Form 5558 is properly completed and, with regard to Form 8955-SSA, properly signed.

Bulk Submissions
Some firms prepare Form 5558 for all of their clients at the same time and send them to IRS in a single package.  For control purposes, these filers include a cover sheet that lists each plan / plan sponsor shown on the Form 5558 that are included with the batch.

IRS has confirmed that such cover sheets are acceptable, although it’s unlikely that IRS is comparing the list to the contents of the package. IRS focuses on processing the individual Forms 5558 that are submitted. Any cover letter submitted with Form 5558 filings cannot serve as a part of the request for extension of time to file.

As a reminder, the overnight service address is 1973 Rulon White Boulevard, Ogden, UT  84201-1000.

Who May Sign Form 5558
Signatures are required on any Form 5558 submitted to extend the due date to file Form 5330 or Form 8955-SSA. Per the Form 5500 Reminders [http://www.irs.gov/retirement/article/0,,id=249377,00.html] page, the Form 5558 must be signed by a:

  • Plan Administrator, employer, or plan sponsor, or
  • An individual or authorized representative permitted to sign the Form 5330 (or Form 8955-SSA).

Typically, the persons who could be authorized to sign the Form 5330 or Form 8955-SSA include so-called Circular 230 preparers, which includes attorneys, CPAs, enrolled agents, enrolled actuaries, and ERPAs. Generally, unenrolled preparers may not be authorized to sign Form 5330 or Form 8955-SSA. It should be noted that a Power of Attorney (Form 2848) would not be required merely to authorize signature of Form 5558 on behalf of the plan sponsor.

ASPPA’s Government Affairs Committee sent a letter to IRS on November 21, 2011 requesting the elimination of the signature requirement when filing Form 5558 to extend the due date for filing Form 8955-SSA. To date, IRS has not issued any official response; however, while speaking at the recent AICPA Employee Benefits Conference in Atlanta, Monika Templeman (IRS Director of EP Examinations) reportedly stated that the IRS expects to release a proposed regulation that would eliminate the requirement for a plan administrator's signature on Form 5558 for extending the filing deadline for Form 8955-SSA. Until such guidance is official, filers should be aware that a signature is necessary.

Other Common Errors
IRS posted a list of errors that potentially invalidate a Form 5558 in its Retirement News for Employers - Winter 2012 -- Form 5558 [http://www.irs.gov/retirement/article/0,,id=253983,00.html]. Quoting from the IRS web site, the publication provided the following explanation:

  1. It's possible that the information on your extension application didn’t match your Form 5500-series return (Form 5500, 5500-SF or 5500-EZ), Form 5330 or Form 8955-SSA. For example,

    Mismatched plan sponsor or administrator name -- The plan sponsor or plan administrator listed on Form 5558, Part 1, Block A didn’t match the name listed on the Form 5500-series return. The names must be identical.
    1. Example – abbreviation: Form 5500 shows “Dana Kay Inc.” as the plan sponsor, while Form 5558 shows “DK Inc.” as the plan sponsor.
    2.  Example – common variation: Form 5500-SF shows “Hawk Inc.” as the plan sponsor, while Form 5558 shows “The Hawk.”
    3. Example – different entity: Form 5500-EZ shows “Alvin Cooke P.C.” as the plan sponsor, while the Form 5558 shows “Alvin Cooke.”

    • Mismatched EIN, plan year-end or plan number -- The employer identification number, Social Security number, plan year-end, or 3-digit plan number on Form 5558 didn’t match the ones used on your 5500-series return. Always use the EIN assigned to the plan sponsor for the Form 5500-series return. If you don’t have an EIN, you can apply for one over the phone or online.
    • Mismatched plan name -- The name you entered in Form 5558, Part 1, Block C didn’t match the name used on your Form 5500-series return.

  2. Sponsors of multiple plans
    If you sponsor more than one plan, make sure the plan name and number on the Form 5558 match the plan name and number on the Form 5500-series return for that plan. This is especially important if you have recently merged one plan into another or changed your plan’s name.

  3. Always use the current version of the form

Check that you are using the most current version of any IRS form. The Retirement Plan Forms and Publications Web page has the latest version of forms, including the fillable versions if available.

We Can Dream....
As we have become comfortable with the electronic efficiencies of EFAST2 and FIRE, many filers / preparers would prefer an electronic option for filing Form 5558. With limited resources and recurring budget constraints, however, IRS can only share that fantasy for the time being.

The IRS Updates FAQs on
Form 8955-SSA 

As noted in my last posting, IRS has issued both the 2009 and 2010 Form 8955-SSA but indicates that it intends the following rules will apply:

  • A filer that has used the 2009 Form 8955-SSA to report both 2009 and 2010 data need not file again using the 2010 form.
  • Filers may still use the 2009 form to report combined 2009 and 2010 data.
  • If only 2010 data is being reported, then the 2010 form should be used to report that data or to provide additional data for 2010 that has not previously been reported; however, a 2009 form used to report only 2010 data will not be rejected.

On November 9, 2011, IRS updated its FAQ #3 on the Form 8955-SSA Resources Corner [http://www.irs.gov/retirement/article/0,,id=238940,00.html] to read as follows:

FAQ#3
Even though the PY 2010 Form 8955-SSA is available to the public, can I still combine PY 2009 and PY 2010 data on the PY 2009 Form 8955-SSA?

Yes, plan administrators can continue to use the PY 2009 form for the combined 2009 and 2010 data even though the 2010 form has been released. As stated in the Instructions to the 2009 Form 8955-SSA, plan administrators may use a PY 2009 form to report information for the 2010 plan year, or combine the information for the 2009 and 2010 plan years on a single PY 2009 form. The release of the 2010 form does not affect this rule.

If you file one Form 8955-SSA covering both 2009 and 2010 reportable employees, the 2010 reportable employees are treated as reported in 2009. Enter the beginning and ending date for the 2009 plan year on the Form 8955-SSA when combining information for the 2009 and 2010 plan years. For example, a plan that reports on a calendar year basis and combines information for the 2009 and 2010 plan years should enter January 1, 2009 as the beginning date and December 31, 2009 as the ending date.

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On November 18, 2011, the IRS further updated its FAQ regarding filing Form 5558 to extend the due date for filing Form 8955-SSA, as follows:

FAQ #18
Can the January 17, 2012 deadline for filing 2009 Form 8955-SSA be extended by filing a Form 5558?

No. Ordinarily, the rules applicable to the extension of time for filing Form 8955-SSA are the same as those applicable to the extension of time for filing Schedule SSA (Form 5500). Thus, Form 5558, Application for Extension of Time To File Certain Employee Plan Returns, may generally be used to file for a one-time extension of time of up to 2 1/2 months after the normal due date. However, because of the special extended filing date for the 2009 and 2010 Form 8955-SSA, this automatic extension is not available for filings due on January 17, 2012. A Form 5558 may be filed, however, if the due date for filing the Form 8955-SSA (with or without extension) falls after January 17, 2012.

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Also on November 18, 2011 the IRS added FAQs to address questions raised by 403(b) plan filers, given that these plans have not previously reported information to SSA. Here are the two FAQs:

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403(b) FAQ #1
Does the Form 8955-SSA filed for 2009 by a 403(b) plan sponsor have to report participants who separated from service prior to 2008 with a deferred vested benefit under the plan?

 Generally, no. Form 8955-SSA filed for 2009 generally only has to report participants who separated from service in 2008. Thus, participants with a 403(b) contract or account who separated from service prior to 2008 are not required to be reported on the Form 8955-SSA filed for 2009 (or for any subsequent year).

However, a participant should be reported on the Form 8955-SSA filed for 2009 if that participant separated from service in a year before 2008 and began receiving payments under the contract or account, but the payments stopped in 2008 before all of the participant’s benefits were paid. See the Instructions for 2009 Form 8955-SSA. See also Question and Answer 2 for an exception that applies even in the case where payments stopped in 2008.

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403(b) FAQ #2
Does a 403(b) plan sponsor have to report all participants who separated from service after 2007 with a deferred vested benefit under the plan?

No. A plan sponsor is not required to report a separated participant if the participant’s deferred vested benefits are attributable to an annuity contract or custodial account that is not required to be treated as part of the section 403(b) plan assets for purposes of the reporting requirements of ERISA Title I, as set forth in DOL Field Assistance Bulletin (FAB) 2009-02.

For this exception to apply, (1) the contract or account would have to have been issued to a current or former employee before January 1, 2009, (2) the employer would have ceased having any obligation to make contributions (including employee salary reduction contributions), and in fact ceased making contributions to the contract or account before January 1, 2009, (3) all of the rights and benefits under the contract or account would be legally enforceable against the issuer or custodian by the participant without any involvement by the employer, and (4) the participant would have to be fully vested in the contract or account. For further information, please see DOL FAB 2009-02, www.dol.gov/ebsa.

EFAST2 Practitioner Filing Authorization and Other Updates

Renew Practitioner-Filer Authorization Annually
On May 13, 2010, the DOL announced an option that permits service providers to submit Form 5500 series reports on behalf of clients. While plan administrators and plan sponsors may continue to obtain signer credentials and execute the Form 5500 or Form 5500-SF signing ceremony either through I-FILE or their service provider’s software, many practitioners found this option a simpler way to manage the filing process.

The practitioner filing option is described in FAQ 33a [see http://www.dol.gov/ebsa/faqs/faq-EFAST2.html], which  has been updated to reflect the modifications recently made to the public disclosure web site. Although not specifically mentioned in the FAQ, the DOL’s Help Desk advises that the plan administrator must provide written authorization to the service provider on a year-by-year basis and cannot simply sign an open-ended, or evergreen, authorization. [click here]

It is acceptable to reference more than one plan in an authorization; for example, when an employer offers both pension and welfare benefit plans that require a Form 5500 filing. However, the authorization may not cover more than one plan year for such plans.

Other EFAST2 FAQ Updates
On March 31, 2011 the EFAST2 FAQs were updated, as follows:

  • FAQs 3 and 9 were removed because they applied only to 2009 plan year filings;
  • FAQ 33b was added to explain what happens when the Form 5500 series report is not signed with a valid electronic signature;
  • FAQs 1, 2, 4, 8, 10, 11, 18, 23a, 29, 33a, 38 have been modified with updated language and new links to reflect the current EFAST2 system;
  • FAQs 16b-c-d-e have been added to provide information about retrieving forgotten passwords and credentials; and
  • FAQ 27a has been added to provide more information about submitting secured attachments.

Stay Tuned
More information about Form 5500 matters -- including Forms 5558 and 8955-SSA -- will be posted as it becomes available.

Form 8955-SSA — IRS Dribbles Out Information
About Filing of New Form

Form 8955-SSA Replaces Schedule SSA
With the implementation of the fully electronic EFAST2 system beginning with 2009 plan year filings of Form 5500, the Schedule SSA was eliminated as the method of reporting to IRS and the Social Security Administration those participants who had terminated employment and who had not started receiving benefit payments.  Instead, the IRS created Form 8955-SSA and released the draft form and instructions for public comment on November 1, 2010. [click here]

A previous article on this website described some of the loose ends in the instructions.  Although the form and instructions have been not finalized as of March 6, 2011, the IRS issued Announcement 2011-21 on March 3, 2011 to describe some of the rules that will surround the new form.

Announcement 2011-21
Without the final form and instructions, the information provided in the release causes many practitioners to have more questions than answers.  Here are a few of the tidbits gleaned from the IRS document:

  • The IRS will be releasing the 2009 form and instructions in the near future; however, the 2010 form and instructions will not be available until later this year.
  • The 2009 and 2010 filings are due by the later of (1) the due date that generally applies for filing Form 8955-SSA for the 2010 plan year, or (2) August 2, 2011.
  • Plan administrators will be permitted to report information that would otherwise be required to be reported on the 2010 Form 8955-SSA using the 2009 form. What the announcement doesn't indicate is whether or not a plan may file both the 2009 and 2010 information on a single 2009 Form 8955-SSA.
  • It appears that Form 8955-SSA will be filed only for years for which there is data to report.  Thus, an annual filing may not be required depending on the facts and circumstances.
  • The IRS has adapted the FIRE [Filing Information Returns Electronically] system to permit voluntary electronic filing of Form 8955-SSA. Form 4419, Application for Filing Information Returns Electronically, must be completed to request a specific TCC (Transmitter Control Code) for purposes of transmitting the Form 8955-SSA data. The FIRE help desk confirmed that a single TCC may be used for all client plans. IRS forms and publications may be ordered by calling toll-free at 800-829-3676 or downloaded from the IRS website at www.irs.gov. Also see http://www.irs.gov/taxtopics/tc802.html
  • While the Form 5558 is being adapted to permit a request for an extension of time to file Form 8955-SSA, Announcement 2011-21 states that plan administrators also are granted an automatic extension of time to file the report until the due date of the federal income tax return of the employer if certain conditions are satisfied.

No PTIN Required for Form 8955-SSA
On March 4, 2011, IRS updated its FAQs at http://www.irs.gov/taxpros/article/0,,id=218611,00.html to indicate that Form 8955-SSA is not subject to the PTIN rules.  The text of the FAQ is as follows:

9.  I am a retirement plan administrator who prepares Forms 5500 and the accompanying schedules for my clients. I also prepare Forms 8955-SSA and Form 5558 for my clients. While the Form 5500 series returns are included in the list of forms exempted from the PTIN requirements in Notice 2011-6, the Forms 8955-SSA and Forms 5558 are not included in that list. Am I required to obtain a PTIN? (posted 3/4/11)

No. The Form 8955-SSA, Annual Registration Statement Identifying Separated Participants With Deferred Vested Participants, and Form 5558, Application for Extension of Time to File Certain Employee Plan Returns, are, for purposes of Notice 2011-6, part of the "Form 5500 series" of tax returns inasmuch as these forms are prepared either in conjunction with the filing of a retirement plan's Form 5500 filing or to request an extension of time to file a Form 5500 series tax return.

Stay Tuned
More information about Form 8955-SSA will be posted as it becomes available.

Form 5500 Not Subject to PTIN Rules
Under New IRS Guidance

IRS issued Notice 2011-6 [click here] to provide additional guidance regarding the implementation of the new Treasury regulations governing paid tax return preparers. ASPPA and other organizations representing tax return preparers worked with the IRS to achieve a more practical application of the PTIN rules.

As a result, the IRS has decided to allow persons who are not attorneys, certified public accountants, enrolled agents, or registered tax return preparers to obtain a PTIN and prepare, or assist in the preparation of, all or substantially all of a tax return in certain circumstances. While the IRS  broadly interprets the term tax forms, the Notice also exempts certain forms, many of them employee benefit plan related, from the PTIN requirements. 

Forms Not Requiring a PTIN
Section .03 of the Notice specifically exempts the following benefit plan related tax forms from the PTIN requirements:

  • Form 1099 series;
  • Form 2848, Power of Attorney and Declaration of Representative;
  • Form 5300, Application for Determination of Employee Benefit Plan;
  • Form 5307, Application for Determination for Adopters of Master or Prototype or Volume Submitter Plans;
  • Form 5310, Application for Determination for Terminating Plan;
  • Form 5500 series;
  • Form 8717 User Fee for Employee Plan Determination, Opinion, and Advisory Letter Request

Additional forms are listed in Section .03 of the Notice, and  the IRS may in future guidance modify the list of documents to which the PTIN rules apply.

Forms Requiring a PTIN
Benefit plan practitioners may still need a PTIN, however, because certain tax forms frequently prepared by benefit plan practitioners require the insertion of the PTIN and are not included on the exempted list (shown above).  Such forms include:

  • Form 945, Annual Return of Withheld Federal Income Tax
  • Form 990, Return of Organization Exempt from Income Tax
  • Form 990-T, Exempt Organization Business Income Tax Return
  • Form 5330, Return of Excise Taxes Related to Employee Benefits Plans

It is unclear whether or how the PTIN rules might apply to Form 5558, Application for Extension of Time to File Certain Employee Benefit Plan Returns, which has not been updated since 2008. ASPPA anticipates the Form 5558 will be revised after the release of the new Form 8955-SSA, Annual Registration Statement Identifying Separated Participants With Deferred Vested Benefits; however, any PTIN requirement associated with Form 5558 is likely to apply only with regard to a request for an extension of time to file Form 5330.

PTINs for Non-Circular 230 Individuals Require No Testing / Continuing Education
Beginning January 1, 2011, all individuals who are compensated for preparing, or assisting in the preparation of, all or substantially all of a tax return or claim for refund of tax must have a PTIN.

Circular 230 practitioners. This PTIN category includes an individual who is already subject to the rules of Circular 230, including attorneys, CPAs, enrolled agents, enrolled actuaries, and ERPAs. Such persons may sign tax returns and continue to be subject to professional conduct, ethics, and continuing education rules.

Non-Circular 230 practitioners.  Many preparers will most likely benefit from the IRS’s decision to issue PTINs and not require competency exams covering tax returns and claims for refunds not prepared by the individual (e.g., the Form 1040 series).  However, the application process will require such an individual to certify that he or she does not prepare, or assist in the preparation of, all or substantially all of any tax return or claim for refund covered by the competency exams for registered tax return preparers administered by IRS (Form 1040 series until further notice) and the individual must pass the requisite tax compliance check and suitability check (when available). Currently, there is no continuing education requirement for these PTIN holders; however, such persons are subject to the duties and restrictions relating to practice in subpart B of Circular 230 (Duties and Restrictions Relating to Practice Before the Internal Revenue Service).

The IRS does not expect to offer any competency examination before mid-2011 and then only to those who prepare Form 1040 series returns. Tax preparers who are not attorneys, CPAs, or enrolled agents will be allowed to obtain a provisional PTIN and continue to prepare and sign tax returns or claims for refund until the appropriate competency exam is available.

Conclusion
Theadditional PTIN guidance issued by IRS is helpful.  Benefit plan consultants and administrators should review their return preparation practices and identify those individuals who should apply for a PTIN.  This most immediately affects those persons who prepare Form 945, which is due by January 31, 2011 (or by February 10, 2011 if tax deposits were made on time and in full).

Little Known Code Section Requires Notice to
Participants Reported on Form 8955-SSA

In the November 1, 2010 Federal Register, the IRS published a notice and request for comments on the proposed Form 8955-SSA, Annual Registration Statement Identifying Separated Participants with Deferred Vested Benefits, which replaces the previous Schedule SSA filed with Form 5500. [click here] for a copy of the Federal Register notice along with a draft (as of 5-24-2010) of the new form and its instructions.

In a separate article to be posted soon, I’ll comment on the instructions; however, line 8 of the new form warrants special discussion.

Line 8: Did the plan administrator provide an individual statement to each participant required to receive a statement? 
__ Yes   __ No 

Statement Requirements
The requirement isn’t new. In fact, the statute and regulation have been around since the late 70s!  What is new is that it appears the IRS is going to start enforcing the rule, which has a $50 per participant price-tag for failures to comply.

The Code.  IRC §6057(e), effective for plan years beginning after December 31, 1975 and amended for plan years beginning after December 31, 1984 by adding the final sentence, reads:
(e) INDIVIDUAL STATEMENT TO PARTICIPANT. Each plan administrator required to file a registration statement under subsection (a) shall, before the expiration of the time prescribed for the filing of such registration statement, also furnish to each participant described in subsection (a)(2)(C) an individual statement setting forth the information with respect to such participant required to be contained in such registration statement.  Such statement shall also include a notice to the participant of any benefits which are forfeitable if the participant dies before a certain date.

The Regulation. The regulation at §301.6057-1(e), which was finalized in 1978, reads:
(e) Individual statement to participant. The plan administrator of an employee retirement benefit plan defined in paragraph (a)(3) of this section must provide each participant with respect to whom information is required to be filed on Schedule SSA a statement describing the deferred vested retirement benefit to which the participant is entitled. The description provided the participant must include the information filed with respect to the participant on the Schedule SSA. The statement is to be delivered to the participant or forwarded to the participant’s last known address no later than the date on which any Schedule SSA reporting information with respect to the participant is required to be filed (including any extension of time for filing granted pursuant to section 6081).

Instructions Proposed for Form 8955-SSA
As previously noted, line 8 of the new form asks the plan sponsor and plan administrator to verify whether or not such statement has been provided. The SSA form itself requires reporting of the participant’s social security number, name (first, middle initial, last), type of annuity and payment  frequency, along with the amount of the periodic defined benefit payment or value of the participant’s account as of the date of termination.

Fortunately, the proposed instructions, on page 2, under Prior Year Statement says that filers need only respond to line 8 with regard to reporting for 2009 and later plan years. And the 2009 filing of SSA data is currently delayed until at least August 1, 2011 for 2009 plan years.

Unfortunately, it is unlikely that any current participant statement provides such information.

What To Do?
It’s probably reasonable to assume that IRS will begin enforcing this disclosure rule and imposing penalties when failures occur.  That means service providers need to pull together a game plan for complying with the notice requirements.

The regulation is silent about what constitutes an acceptable disclosure. For example, is it necessary to tell the participant they were reported using Code A or can the statement simply explain they are being added to the SSA’s records for this deferred benefit? How much explanation about what SSA does with this information has to be provided to the participant?

The nature of disclosures to participants has changed considerably since these regulations were issued in the 70s, including the presentation of social security numbers in correspondence.  Watch for more discussion of this issue in the benefits community in the coming weeks and months. More information will be posted here as it becomes available.

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    This page last updated October 25, 2014.

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