What is Form 8955-SSA and what is its purpose?

The Form 8955-SSA is used to satisfy the reporting requirements of Internal Revenue Code Section 6057(a).  The “SSA” stands for Social Security Administration, and the purpose of the form is to reunite terminated and retiring participants with old retirement account balances they may have forgotten about.

Plans use Form 8955-SSA to report former participants who still have balances in the plan, but there is a bit of a lag time between a participant’s termination date and when they must be reported. The best way to explain this is with an example. Assume your plan operates on a calendar year and that Joe Participant terminates employment during 2021. If Joe still has a vested balance in the plan as of the end of 2022 (the year after the year he terminates), then he must be reported on Form 8955-SSA for the 2022 plan year. The deadline for filing the form is the same as that for the Form 5500 series – July 31, 2023, or October 15, 2023, if on extension.

All participants that are reported on the Form 8955-SSA go into the Social Security Administration’s database. When an individual files a claim for social security benefits, the Social Security Administration checks that database and notifies the individual that they might still be due a benefit from the plan.

When a participant who has previously been reported takes a distribution, the instructions to the Form 8955-SSA indicate that it is optional to report that participant again to reflect that he or she is no longer entitled to any further benefits. The first reaction might be to skip that step if it’s optional. However, if you do not “un-report” participants, you may face a difficult challenge if they later receive a letter from the Social Security Administration telling them they are entitled to a benefit from your plan. For that reason, we always recommend reporting participants again once they’ve been paid out.

Can the Form 8955-SSA be filed electronically?

Yes, Form 8955-SSA can be filed electronically using third-party software and the IRS Filing Information Returns Electronically (FIRE) system or using SSA-approved third-party software.

To assist a plan administrator with meeting the filing requirement for the Form 8955-SSA, our office has obtained the required TCC Code from the IRS allowing us to upload files (prepared by third-party software) electronically to the IRS FIRE site on a plan administrator’s behalf.

Does a Form 8955-SSA need to be filed for a year in which there is no information to report?

No.

What is the penalty for not filing Form 8955-SSA?

The penalties associated with the Form 8955-SSA are:

1. Failure to file Form 8955-SSA (including failure to include all required participants).

The penalty is $10 for each participant not reported and for each day multiplied by the number of days the failure continues, up to a maximum of $50,000. The penalty is imposed on the plan administrator failing to file unless it is shown the failure is due to reasonable cause.

2. Failure to file notification of a change in the status of the plan

This penalty applies to failure to file a notification of a change in the status of the plan, such as a change in the plan name, a termination of the plan, or a change in the name or address of the plan administrator. The penalty is $10 for each day during which such failure occurs, up to a maximum of $10,000.  The penalty is imposed on the plan administrator failing to file unless it is shown the failure is due to reasonable cause.

Notification of a change in the status of the plan or a change in the name or address of the plan administrator occurs when the plan sponsor or administrator completes Form 5500, 5500-SF, or 8955-SSA, and, at that time, identifies any changes to the plan on the form.

3. Failure to furnish statement to plan participant or fraudulent statement

Each plan administrator required to file a Form 8955-SSA must, no later than the due date for filing the form with the IRS (including extensions), also furnish to each affected participant an individual statement showing their required information contained on the form. A penalty of $50 is imposed on the plan administrator required to furnish the statement for each willful failure to furnish the statement to each affected participant or a willful furnishing of a false statement.

Note:  A plan administrator can meet this requirement by timely furnishing the affected participants with either a benefit statement, distribution forms, or a separately designed statement.  The statements or other documentation issued to the participants must include the following information:

• Name of the plan
• Name and address of the plan administrator
• Name of the participant
• Nature, amount, and form of the deferred vested benefit to which such participant is entitled.

The simplest method to ensure compliance is to send designed statements to the affected participants.  To assist the plan administrator with this process, our office prepares (through third-party software) and directly mails designed statements to the participants required to be reported on Form 8955-SSA each plan year.

4. Late filing penalty

This penalty applies to the failure to file Form 8955-SSA on the date and in the manner prescribed.  The penalty is $25 for each day the form is late (with no maximum).