8955-SSA on takeover plan

[Dennis Povloski]

If you have a takeover plan, that has many previously terminated, deferred vested participants, but you have no idea that they were ever properly reported on the form 8955-SSA, what is your philosophy on reporting them?

Assume they were reported correctly and not report until they get paid out with code D?

Report them with Code B just to make sure they're in the system?

Something else?

Thanks!
Dennis

[Tom Poje]

Code D simply tells the govt to delete them from the system (don't send out a letter to the person when they hit age 65 or whatever triggers that)
so if the person was previously reported you are covered.
if they were never reported, well, you can't delete someone who wasn't previously reported, but then on the other hand, they would never have gotten a letter anyway, so that seems fairly neutral end result.
..............
if you report them as a B, that implies they should exist as an 'A' already and if they don't I'm not sure what the heck will happen.
it is after all, the govt system.
if it was years ago, you could argue they were reported on paper but the data mustn't have gotten entered, but now since most of these are filed electronically I would assume the prior admin did things correctly (though from what I've seen that is probably not the case)

to throw a wrench into it, what if the prior admin files them the year they term rather than one year after the fact.

so someone quit in 2014 and they were filed as an A. you would have waited a year, giving them a chance to get paid out, and lo and behold they do get paid out in 2015. now, how do you know you need to report them as a D in 2015, if you are assuming something else?

......

to my former co-worker -

Dennis - Is that avatar a picture of you looking for the penny in the corner....

[My 2 cents]

If it is a takeover plan, is it possible to get copies of the 8955-SSA forms as filed in the past year or two? That would enable you to distinguish between recently terminated people who were reported and those who weren't. If someone terminated in 2013 and did not appear on either the 2013 or 2014 form, report them now.

Otherwise, wouldn't it be reasonable to assume that everyone who handled the plan previously saw to it that the people who should have been reported had, in fact, been reported? So if someone who should have been reported previously dies or retires or is paid out, report them as a "D" and don't worry about whether they are on the system to remove.

[ESOP Guy]

My thinking is when in doubt if you can justify a D do it. That is much easier then someone showing up years letter with a letter from the SSA saying they might be due benefits. If that happens you have to try and search to see if they were paid or not. Not getting the letter send is clearly the easier option for everyone concerned. (Just do a search on some of the comment threads on this board from people faced with trying to figure out someone was paid who terminated 20 or 30 years ago.)

Add to it I have never seen any down side to filing a D and the person wasn't reported for an A before. Until that happens it is all upside and no down side to file a D when in doubt.

[TPApril]

If someone terminated in 2013 and did not appear on either the 2013 or 2014 form, report them now.

Assuming as per your quote, a 2013 terminee was not reported in 2013 and it appears no 8955-ssa was filed for 2014 at all, would you file a late 2014 form, or just file them on a 2015 form and move on?

[ESOP Guy]

Years ago I was put them on 2015 and move on 100% of the time.

Now I am still that way but it is more complex.

The IRS will send a penalty letter if they detect a late filing. (I had a client get one) So if you file the 2014 late prepare you client to get a penalty letter from the IRS. The instructions to the form tell you what the amount is per day per person.

Also, the most recent IRS audits my clients have had the IRS is asking about terms and the 8955-SSA. So if 2013 gets audited they will ask when and how the people who needed to be reported were reported. Things could get detected how they went in an audit. I don't have any relevant experience to this situation yet.

So if you file them on 2015 and either 2013 or 2015 get audited the issue might come up and problems might happen.

I think the strict letter of the law answer is file the late 2014. You might be able to get the penalty waived (never tried it) or you might not.

Like I said I sill favor the 2015 but might have a talk with client to make sure they are comfortable with it. (Might have talk with my boss also)