Schedule SSA--Form 5500

[Guest carsonv]

Are all participants that terminated during a plan year, with a benefit, required to be reported on that years Sch SSA.

eg., A terminated participant in 2002 with an account balance, are they required to be reported on the 2002 SSA.

In the past it seems that we have been reporting terminees in the prior year that have not been paid out. So, will everyone that has a terminated participant during the year, w/ account balance, have an SSA?

Anyone care to clear this up for me?

[JanetM]

I only list the terminated who termed more than one year ago - not during the current plan year.

Using your example - termed in 2002 with balance. Do not list them on 2002, list on 2003 if they still have balance.

IF you listed every terminee in 2002 - you will have to go back and list them as D codes in 2003. That is just extra work.

[E as in ERISA]

I agree with JanetM's approach. The instructions provide "The separated participant must be reported no later than on the Schedule SSA filed for the plan year following the plan year

in which separation occurred." So if they termed in plan year 2002, you can wait until July 2004 when you file plan year 2003's Form 5500 (and a lot of the participants would have been cashed out during that time).

[Fredman]

i agree with the above and would add that we check for balances up to the day we file the return. for example, someone terms in '01 and takes distribution in march '03=not reported on SSA. in other words, just because they termed in '01 and have a balance at the end of the plan year doesn't mean they get reported.

[Guest rachd]

I use Relius Government Forms software to complete the 5500 and am wondering how I report participants that terminate during the plan year with account balances on the first page of the 5500 (specifically line 7i). The instructions state : "Line 7i. If a number is entered on line 7i, you must file Schedule SSA (Form 5500) as an attachment to the Form 5500."

It then gives me an error warning if I do not decide to attach a SSA. Do I not report this person on this blank? In the past, I have always reported separated participants on that current year's 5500.

Also, this was stated with the above instructions: "Caution: Code section 6057(e) provides that the plan administrator must give each participant a statement showing the same information reported on Schedule SSA for that participant."

I have never provided any info to the participant. Am I supposed to send them a copy of the SSA?

I appreciate your help!

Sincerely,

Rachel Diederich

[Guest carsonv]

It is my understanding that participants reported in line 7(i) must be included on the SSA.

I have always put participants that terminated the previous year w/ account balance here in the past. That is what my origional question was about--Are we required to put participants that terminated that year w/ acct bal on the 5500 for that year? It is my understanding that they are not required to be reported, but can be.

Are you wanting to put participants here, and not report them on the SSA? If this is the case, it will take more looking into.

As for your other error message, I have not encountered it yet--although I look forward to it......not really!

Carson

[MGB]

Please note what the SSA is used for (this is its ONLY use).

When the person turns 65, the Social Security Administration sends them a letter telling them that they should contact you (the plan administrator) because they probably have money coming from the plan. (Yes, I have actually seen these letters...they really do it.)

Decades from now, do you want to be fielding questions from hundreds or thousands of participants wanting to know where their money is? What if you have no record of them (remember, this may be 30 or 40 years from now). How will you be able to justify to them that they actually don't have any money coming?

I would try to not put people on the SSA if there is any chance that they are going to be paid out in the short-term.

[BFree]

I agree with MGB. Note that you can also file the SSA to take people off the Social Security Administration's list when they are paid.

[Guest rachd]

In that case, I definitely would like to follow the guideline of reporting on the next year's 5500 if they still have an account balance. I was just not aware of this in the past (I've only been doing 5500's for 2 years and had a horrible teacher!)

My question is still on how to report the participants termed during that current plan year w/remaining balances. Do I just add these participants to line 7c (Other retired and separated participants entitled to future benefits) and not in line 7i?

I just saw a new post stating you can take participants reported on the SSA off if they've been distributed- is that the option "D"? I would hate to have to go back through the ones I've done but in the long run, it may be worth it. Can I go back and remove them even if it's been a couple of years? Are there any limitations?

Thanks again for all your help!

Rachel

[Tom Poje]

actually, you might not have had a bad teacher.

A few years ago (I don't recall which year) the instructions for the 5500 said you had to report the people the same year they quit. Maybe your teacher was using those!The IRS later issued an ooops, but obviously that doesn't change printed instructions.

While perhaps it may require some time, it is worth the trouble coding paid outs the 'D'

mgb- decades from now I hope to be retired! but it wouldn't be fair to let someone else down the road have to put up with call from the participant. I had to do it once on a takeover case.

Not a lot of fun.

[Guest rachd]

Ok, so now I am going back as far as I can and "repairing" those participants that have been reported on the SSA but have now been paid out. Since I would not have anyone to report for this year (anyone termed in 2002 w/balance, I will report on the 2003 5500), is it ok to leave line 7i with a 0? My software gives me an error message that I should not be filing an SSA if that line is blank.

Thanks,

Rachel

[Guest Rosemary Raymer]

Now that we've decided who to report, lets discuss the amount to report. Do you go back to the prior year's vested balance or put the current vested balance? In the spirit of the form, i.e., age 65 notification by the SSA of a benefit, does it really matter? Some auditors seem to think it does - only they don't agree which way.

[Guest F1fan]

The 5500 Preparer’s Manual for 2001 Plan Years notes that many administrators report the account value “as of the last day of the plan year for which the 5500 report is being filed.” The Manual recommends being consistent in whatever method is used in reporting account values. My personal view is that, from a practical standpoint, the value reported is almost a moot point. If a person does receives an SSA notice reporting a possible benefit, the current account value will certainly not be the same value as reported to the SSA many years prior. In fact, the person may have already received a total distribution subsequent to the account being reported the SSA.

[E as in ERISA]

Followup on rachd's comment: "Code section 6057(e) provides that the plan administrator must give each participant a statement showing the same information reported on Schedule SSA for that participant."

ERISA 105© and IRC section 6057(e) require that participants reported on an SSA be furnished with the info on the SSA (name of plan; name and address of plan administrator; participant's name and SSN; and the nature, amount and form of the benefit). Participants in DC plans are not otherwise required to receive statements at any specific time (only upon request). Therefore, regular participant statements could probably satisfy this information if they include all the info.

[mwyatt]

Make darn sure that you clear out any previously reported participants who have subsequently been paid out (unless you are sure that you're going to have all plan records, bank statements, cancelled checks available for the next few decades to prove that they in fact received payment). We received a call from a former participant a couple of years ago who was paid out in the 1980s over $15,000 but wasn't taken off of the SSA in the year of payment. She received the Social Security letter and calls the client looking for her funds. You would think someone would have a little recollection that they received a check for an amount equalling 50% of their salary at the time, but she sure didn't (selective amnesia). Try finding cancelled checks from 15 years past (especially when the bank at the time went under 10 years ago) to prove your point...

[kocak]

I can't tell if you got this question answered, but the number reported on line 7i should match the number on the SSA, including deletions. If you have an SSA, line 7i should not be 0.

kocak