8955-SSA for less than cash out benefit

[Belgarath]

I've never heard this before - another TPA is saying you don't have to file an 8955-SSA if the participant has less than a cash-out benefit.

I've never heard this before, and I suspect what they really mean is perhaps they don't normally report, under the assumption that the cash out benefit will be timely distributed, under the terms of the plan.

But, it seems to me that if they don't get it distributed, then there's no exemption from 8955-SSA reporting just because it is less than the cash-out amount.

Anyone else ever heard anything like this?

[ESOP Guy]

No, I have not heard anything like that.

It would be interesting to know when they report people normally. Is it the form for the year they terminate or the form of the year following termination.

[Belgarath]

Thanks. If I'm correct on my guess, I'm also guessing it is the latter.

[david rigby]

Is the claim (in the original post) supported by the SSA instructions?

Perhaps whoever is making this "you don't have to file" statement is willing to supply his/her reasoning and/or cite(s).

[Belgarath]

Thanks David. Certainly isn't supported by MY reading of the instructions.

And I don't expect any citations to be forthcoming...

[RatherBeGolfing]

I agree, there is nothing to support an exemption from the 8955-SSA based on account balance. Id love to hear their justification though.

[K2retire]

I don't agree with the conclusion that you don't have to file. But perhaps the reasoning is that the balance will be forced out long before the person files for Social Security. Having received a plethora of calls recently from former participants who were notified that they still had balances that were no where to be found, I have some sympathy for that line of thought.

[My 2 cents]

I don't agree with the conclusion that you don't have to file. But perhaps the reasoning is that the balance will be forced out long before the person files for Social Security. Having received a plethora of calls recently from former participants who were notified that they still had balances that were no where to be found, I have some sympathy for that line of thought.

Unfortunately, the person being unpaid now (who is supposed to be forced out) probably means that they are missing. When the person is missing, it can easily happen that they are not paid out before filing for Social Security. If, after this year, they are found/forced out, they are just reported again with a "D".

[K2retire]

I don't agree with the conclusion that you don't have to file. But perhaps the reasoning is that the balance will be forced out long before the person files for Social Security. Having received a plethora of calls recently from former participants who were notified that they still had balances that were no where to be found, I have some sympathy for that line of thought.

Unfortunately, the person being unpaid now (who is supposed to be forced out) probably means that they are missing. When the person is missing, it can easily happen that they are not paid out before filing for Social Security. If, after this year, they are found/forced out, they are just reported again with a "D".

I know that is the way it's supposed to work. But I've found that reporting the distribution does not necessarily prevent the SSA from telling the participant they still have money in the plan.

[RatherBeGolfing]

I don't agree with the conclusion that you don't have to file. But perhaps the reasoning is that the balance will be forced out long before the person files for Social Security. Having received a plethora of calls recently from former participants who were notified that they still had balances that were no where to be found, I have some sympathy for that line of thought.

Unfortunately, the person being unpaid now (who is supposed to be forced out) probably means that they are missing. When the person is missing, it can easily happen that they are not paid out before filing for Social Security. If, after this year, they are found/forced out, they are just reported again with a "D".

I know that is the way it's supposed to work. But I've found that reporting the distribution does not necessarily prevent the SSA from telling the participant they still have money in the plan.

You are correct, the SSA is a mess when it comes to telling people that they have assets in an old plan, even when you report them as distributed. But government shortcomings doesn't change our duty to report. It is just a risky position for a TPA to take when it is clearly not supported by rules or regs. In theory, each client they do this for could be on the hook for $5,000 in penalties per return.