Sch. SSA

[FJR]

When a participant is paid his/her entire vested balance during the plan year and has been reported on sch. SSA in prior years, is that person reported again with a code D once they have been paid?

[Harwood]

Such Code D reporting is optional but highly recommended to avoid future correspondence and headaches.

[david rigby]

Highly recommended!

[RCK]

If you don't report them with a code D (no longer entitled to benefit), the Social Security Administration is going to notify them in 30 or 40 years that they might be entitled to a benefit. Do you want to be digging around in 30 years to prove to the (former) participant that they are no longer entitled to a benefit, even though the SSA says that they might be?

Several times, I have inherited plans that had not reported payouts with a Code D in the past. In each case, we have rounded up whatever historical data we could, and reported them with Code D.

RCK

[Disco Stu]

What support is there that the Code D reporting is optional? I had held this opinion for many years, but was recently questioned by an auditor on the subject. The SSA instructions didn't mention anything about Code D being optional. We buy a 5500 preparer's guide each year. Starting with the 2000 edition, they stopped referring to Code D as being optional.

[BFree]

2002 Instructions - When to Report: "Do not report a participant more than once unless you wish to revise or update a prior Schedule SSA..."

[Harwood]

1994 was the last year when Form SSA made it clear that it is optional to report those who received a distribution and no longer have a benefit. The Form and Instructions changed radically in 1995.

I have a 6/17/96 Tax Alert from Ernst & Young and a 4/22/96 ASPA ASAP which state that the Schedule SSA change from 1994 to 1995 made it appear that all Code B, C, and D reporting was now mandatory. However, E&Y and ASPA insist that the underlying rules did not change and only Code A reporting is mandatory.

To this day, the SSA Instructions read as if code B,C, and D reporting is required.

The 5500 Preparer's Manual did change from 1999 to 2000.

"Optional Reporting of Paid Participants" dropped "Optional"

"may optionally be reported" became "should be reported"

"you may report this information" is now "report this information"

[jquazza]

The key is is it such a problem for you to report them? If it is, then don't otherwise, you might as well include them. More than likely, you won't be bothered by the client because the participant who received a letter from the SSA contacts him 20 years from now, do you keep your clients that long?

I would be worried about reporting all terminated participants with a D now, simply because they are terminated and don't have a balance anylonger. You should make sure beforehand they were reported with an A in the first place. Otherwise, you might be opening the door for someone to look at all the SSA and it can be costly if some participants were missed.