Generally, under the law, the plan administrator of a pension plan that is subject to the vesting standards of the Employee Retirement Income Security Act of 1974 (ERISA) must report information about separated participants during the year with deferred vested benefits. The information is reported to the Internal Revenue Service (IRS) and generally given to the Social Security Administration (SSA). The SSA provides the reported information to separated participants when they file for Social Security benefits. Moreover, the affected participants are to be provided an individual statement containing the information to be provided to the SSA.

The IRS has issued a new form, Form 8955-SSA, to be used for reporting the information about separated participants with deferred vested benefits. For the 2009 and 2010 plan years, the deadline for filing is the later of January 17, 2012, or the deadline for filing the 2010 Form 8955-SSA (generally, the last day of the seventh month following the end of the plan year). For plans with a calendar plan year, the deadline is effectively January 17, 2012. Penalties apply for not filing the Form 8955-SSA timely, or not providing the individual statement to affected participants.

Action Needed: Plan administrators should make sure that the relevant Form 8955-SSA is timely filed. Plan administrators should also make sure that individual statements are furnished to each affected participant. For plans with a calendar plan year, that filing deadline is January 17, 2012.

Background

Old Form

Generally, for years prior to 2009, the information on deferred vested participants was reported on Schedule SSA, which was part of the filing of Form 5500 with the Department of Labor (DOL). When the DOL switched to mandatory electronic filing of the Form 5500, it was decided that the SSA form had to be separately filed with the IRS.

New Form

The IRS developed Form 8955-SSA to replace the old Schedule SSA. The 2009 Form 8955-SSA and 2010 Form 8955-SSA are not precisely the same. The IRS is allowing plan administrators to report the information for 2009 and 2010 on the 2009 form.

Two Ways to Report

The instructions to the 2010 Form 8955-SSA state that filing the form can be either via a paper filing or by an electronic filing. If a paper filing is used, the instructions state that the form should be completed online and then printed. The printed copy will include a barcode capturing the data entered.

Electronic filing will require using the Filing Information Returns Electronically (FIRE) system. That system can be accessed through the IRS website. At this time, use of the system does not require that the filer obtain a Preparer Tax Identification Number (PTIN). The IRS has announced that the FIRE system will be down from December 16, 2011, through January 4, 2012.

Cheiron Observation: We understand that the IRS prefers that electronic filing be used especially where the paper version of the Form 8955-SSA will be hundreds of pages. However, given the downtime of the electronic filing system, plan administrators may wish to consider a paper filing if they want to file by the end of 2011.

Cheiron consultants can assist pension plans in preparing the Form 8955-SSA.

Cheiron is an actuarial consulting firm that provides actuarial and consulting advice. However, we are neither attorneys nor accountants. Therefore, we do not provide legal services or tax advice.