Failure to File 8955 SSA

[Patricia Neal Jensen]

A new (to our TPA firm) 403(b) client has not filed 8955 SSA in the past due to confusing "instructions" sent by internet by a vendor supposedly doing administration.  Our TPA firm is filing for the 2017 year (the first year for which we are responsible) and the client is anxious about the possible penalties.  We know that there are possible penalties, but also note comments which say don't "self- file" on the penalty payment ("According to the IRS website, you should not voluntarily mail in any payment of penalties. If they decide to assess a penalty, they will contact you directly with details.").    Please share any experience with this.  We would like to be able to tell the client whether or not to expect assessment of penalties.  Thanks!

[ESOP Guy]

Yes you can expect an assessment.  it has been a while since they came out (last 3 or so years) ago guidance on how to file these late if the 5500 has a DFVCP (whatever that acronym is.  I file so few 5500s late I have to look it up.)  I used it once but the 5500s were late.  I would see if that has any guidance on what to do if just the 8955-SSA is late.  What I can tell you is when we did that with the 5500 being late there was a $0 assessment for the 8955-SSA.  But I have seen once a client who file and get an assessment- we got it waived when we proved timely extension.  I have heard of other saying they get hit. 

 

[Kristina]

Wait for the IRS letter about a late Form 8955-SSA.  If your client has a reasonable cause for the late filing, that can be addressed at that time.  

You need the IRS correspondence to pay any penalties otherwise you are just chucking money to the IRS.

 

By the way DFVCP means Delinquent Filer Voluntary Compliance Program which is a DOL program when the 5500 Series is late.  IRS will not honor the DFVCP if a required Form 8955-SSA for the filing year was not also filed, even though DFVCP does not cover the Form 8955-SSA

[Mike Preston]

Lotsa nots.  One too many?  

[Bird]

Wait a sec.  You are simply filing a 2017 form and catching up on people who should have been reported in prior years, right?  If you file that form on time, there won't be any penalties. 

Unless there is some kind of audit program I don't know about where they are actually reviewing the 8955 for accuracy in the timing of reporting term'd participants. 

[RatherBeGolfing]

21 hours ago, Kristina said:

By the way DFVCP means Delinquent Filer Voluntary Compliance Program which is a DOL program when the 5500 Series is late.  IRS will not honor the DFVCP if a required Form 8955-SSA for the filing year was not also filed, even though DFVCP does not cover the Form 8955-SSA

So if I had a late 5500 and paid the $750 DFVCP penalty rather than the $15,000 IRS proposed penalty, are you saying the IRS will not honor the DFVCP filing for the 5500 because I also neglected to file a Form 8955?  Thereby making the late 5500 subject to the proposed penalty rather than the reduced penalty?

 

[ESOP Guy]

6 hours ago, Bird said:

Wait a sec.  You are simply filing a 2017 form and catching up on people who should have been reported in prior years, right?  If you file that form on time, there won't be any penalties. 

Unless there is some kind of audit program I don't know about where they are actually reviewing the 8955 for accuracy in the timing of reporting term'd participants. 

They don't check for accuracy unless the IRS audits the plan.  Every IRS auditor now checks to see we are putting the right people on the 8955-SSA. 

I have had to read the 8955-SSA instructions to more then one IRS employee to prove we were putting the right people on the form in the correct. year. 

[ESOP Guy]

48 minutes ago, RatherBeGolfing said:

So if I had a late 5500 and paid the $750 DFVCP penalty rather than the $15,000 IRS proposed penalty, are you saying the IRS will not honor the DFVCP filing for the 5500 because I also neglected to file a Form 8955?  Thereby making the late 5500 subject to the proposed penalty rather than the reduced penalty?

 

I am not sure about your question.  But put in the positive way I know the following:

A plan fails fail to file both the 5500 and 8955-SSA.  If the plan files a DFVCP and pay the fee and follow the IRS instructions for filing the late 8955-SSA they will accept the DFVCP for the 5500.  There will be no fine for the 8955-SSA. 

I have only done that once and we did both forms and followed the IRS' instructions and it was painless. 

I have never tried to DFVCP the 5500 and ignore a missed 8955-SSA.  But given how painless it is add the 8955-SSA to this whole thing to make the IRS happy I would do so.  I guess if an 8955-SSA is just not due I will have to prove that if the IRS asks why no such form with the DFVCP.