8955-SSA Rehires

[PFranckowiak]

What are most people doing with rehires that were previously reported as an A?

One of my sources says the D means distributed. So just leave the Rehires as is until they are paid out.

Another Source says D means Deleted. So Take the rehires off.

Suggestions???

Pat

[Andy the Actuary]

Forget about the IRS Form instructions that don't answer your question. What is the form used for? To alert the SSA to notify participants they may have a benefit. So, you rehire previously reported Polly and you don't delete her from SSA. Now, Polly decides to stay beyond her death. So, Polly is still working and receives a notice from SSA about her benefit entitlement. Is this a desirable result? So, suggest you delete her.

And, if I'm wrong, we can share stories in pension prison.

[ESOP Guy]

http://www.irs.gov/pub/irs-pdf/i8955ssa.pdf

See page 6 of the instructions. A D is for someone who is no longer entitled to the benefit.

So the literal reading is when paid out. I would add if you read a little more it is when they start to be paid out if installments.

Having said that I know plenty of people who D a person when rehired because they think it is easier. It also stops them from getting an IRS letter if they are working still when they apply for Social Security benefits.

[ESOP Guy]

Andy's post wasn't there when I started mine. I included a comment on that reasoning and I find it powerful reasoning.

I am one of the people I know who favors D rehires, but the instructions in my mind are clear that isn't the case.

[Andy the Actuary]

I might add that if you don't delete the rehire, you have some active participants who will be notified by the SSA and some who won't and this inconsistency is undesirable.

[PFranckowiak]

I just called the IRS - was on hold for only 10 minutes. Talked to a person that didn't have a clue. They took my questions and said they would have someone in the technical department get back to me in 15-30 days.

I didn't realize I had a techinical question.

Maybe if we call called - they might clarify instructions in the future - we can always dream.

I will post when I get some answer - hopefully before I decide we need to get them filed.

Pat

[MoShawn]

Now, Polly decides to stay beyond her death. So, Polly is still working and receives a notice from SSA about her benefit entitlement. Is this a desirable result?

I should think not! I'm not sure what DOL rules apply to employment of the deceased, but I would think the smell alone would make this a less than desirable result.

[pmacduff]

FWIW my interpretation is that the Code A is for those "entitled to a benefit". When someone is rehired they are no longer eligible for that benefit per the Plan until they reterm.

I code the rehires with a "D". (I'll add that I only do DC work!)

[david rigby]

FWIW my interpretation is that the Code A is for those "entitled to a benefit". When someone is rehired they are no longer eligible for that benefit per the Plan until they re-term. I code the rehires with a "D". (I'll add that I only do DC work!)

Be careful with this simplified result: what if the plan is frozen?

IMHO, it makes more sense to change nothing on the SSA records for this person. Later, upon "re-term", that person is either a death, a retiree, or a VT. All you really want is that the SSA has a correct answer to the Yes/No question: "is this person entitled to a benefit later?"

[pmacduff]

But what happens if the rehired persons terms a few years down the road and gets paid out right away this time? Rather than have to track and remember that they need to be removed on the SSA, I think it makes more sense to remove them upon rehire and then add them again later if necessary. Again - that's just my opinion and I only work with DC Plans and have no frozen plans.

[Kevin C]

I'm in the rehires are a "D" camp. The instructions say that if a terminated participant rehires before the due date for the filing, you don't report them. If they rehire in a later year, coding them as a "D" gets the same result. When they term again, they will either get paid or be reported on the SSA.

Why would it be different for a frozen plan?

[PFranckowiak]

Ok per my phone call this morning from the DOL.

Code rehires as a "D" because they are now an active employee again and not eligible for a distribution.

He said that was the common sense thing to do. (I didn't know we could go by common sense)

I asked why it was not clear in the instructions - he said the instructions could not contain everything - they would be too long??

Guess they would rather pay someone to answer our questions than to make it clear for everyone on something that is common.

So per the DOL I am not going to code our rehires as a D as they are now an active employee again.

Hope this helps.

Pat

[BG5150]

If you never file an 8955-SSA ever, they'll never know.

Just sayin'

[PFranckowiak]

OPps - I meant to say Now gong to code as D and take off - just easier to keep track of years down the road.

Pat