Participants reported with a Code A, then reported as a D, then payments cease before final pay out

[buckaroo]

How should participants be reported who were originally reported with a Code A, then reported as a D when they began receiving benefits, but then payments cease before the participants are paid out? 

 

The instructions to the Form 8955-SSA state that a Code D should be used to report “a participant previously reported under the plan number shown on this form who is no longer entitled to those deferred vested benefits. This includes a participant who has begun receiving benefits, has received a lump-sum payout, or has been transferred to another plan …”

 

The instructions to the Form 8955-SSA have a CAUTION that states:

 

If payment of the deferred vested retirement benefit

ceases before ALL of the participant's benefit is paid

to the participant or beneficiary, information on the

participant's remaining benefit shall be filed on the Form

8955-SSA filed for the plan year following the last plan year

within which the payment ceased.

 

However, the instructions to Code A state in part “Use this code for a participant not previously reported.”  Should a Code A be used in this situation, should we report using a Code B or is no additional reporting required in this situation?

 

Code B states:

 

Use this code for a participant previously reported under the plan number shown on this form to modify some of the previously reported information. Enter all the current information for columns (b) through (g), as applicable. You do not need to report a change in the value of a participant's account since that is likely to change. However, you may report such a change if you want.

 

We are not aware of Code B being used in this manner.  Our understanding is that it is primarily intended for correcting or modifying information incorrectly reported.

[Kristina]

More information about the actual scenario is needed.  

Are you saying you have deferred vesteds receiving periodic payments?  And you reported them as a D BEFORE their final payment was made?

[Bird]

Yes, I am curious about the scenario.  But given that the purpose of the form, or at least my understanding of it, is to alert SSA that a participant might have benefits coming to them from a plan, I'd think A would serve the purpose.  B does seem to be intended to modify info on someone in the system with some benefits pending.

[Calavera]

On ‎10‎/‎26‎/‎2018 at 12:50 PM, buckaroo said:

but then payments cease before the participants are paid out? 

I am not sure what this means. More information is indeed needed.

[buckaroo]

How about an example to help clarify: 

Participant terminates in 2013.  The get reported with an "A" on the 2014 Form 8955-SSA.  In 2015, they begin taking installments.  The get reported with a "D" on the 2015 Form 8955-SSA. In 2017, they stop the installments.  They now have a balance in the plan in 2017 and they are no longer taking installments.  I would think that the should be reported on the Form  8955-SSA, but how. 

[ESOP Guy]

1 hour ago, buckaroo said:

How about an example to help clarify: 

Participant terminates in 2013.  The get reported with an "A" on the 2014 Form 8955-SSA.  In 2015, they begin taking installments.  The get reported with a "D" on the 2015 Form 8955-SSA. In 2017, they stop the installments.  They now have a balance in the plan in 2017 and they are no longer taking installments.  I would think that the should be reported on the Form  8955-SSA, but how. 

I think an "A" is the correct answer.  I can't cite anything.  My opinion is the people who wrote the instructions to that form didn't bother to ask anyone who actually works in this field to see if their instructions even come close to covering all the possible situations that could come up. 

But to me the point is to let the government know, so they can let the person know, they are due a benefit and an "A" does that.  

[RatherBeGolfing]

"B" is the correct answer, but for the 2018 SSA, not the 2017 SSA, unless you code it as voluntarily reported on line Line 6b.

"A" is only used for participants who have not been previously reported.

"D" is for participants who have been paid out (or started receiving benefits) after being reported as an "A"

"B" is used to modify previously reported information, so for example, you could use it to change the vested balance reported as an "A", or to update the status of a participant previously reported as paid out or receiving benefits as a "D".  

It makes more sense when you also consider the annuity and payment codes.  When the participant was first reported as a "D", it should have been with a payment code other than A (lumpsum) to reflect the frequency of payments.  Now that the payments have ceased in 2017, it will be reported as a "B" with a payment code A to reflect the lumpsum and annuity code A to reflect single sum.

With all that in mind, I don't think there are any consequences for reporting the participant as an "A" rather than a "B", and we know they will screw it up anyway ?

[Bird]

I (still) vote for A but don't think it matters too much.  The important thing is to let the government know the benefit exists (again), so that when the participant collects SS they can ask for money that probably won't exist again by that time, and keep us busy with questions about how to prove a benefit was paid...

(I suspect that  reporting them as "D" wasn't proper when they started getting installment benefits if the payments were not irrevocable, but the instructions aren't crystal-clear on that.  e.g. I don't think we would report a prior "A" as a "D" just because they started getting RMDs.  The codes probably have a leftover DB bias from when things first started and it might help to think about how you would report things as if the plan were a DB plan.)