8955-SSA - pmt < reporting due

[TPApril]

Small plan (< 10 participants)

>On Form 8955-SSA, participant w/ vested balanced who terminated in prior year is required to be reported in current year filing. 

>Current year filing is being prepared during following year, during which said participant takes distribution

(to be specific, 2017 terminee to be reported on 2018 form being prepared in 2019, takes distribution in 2019 prior to filing form)

I'm curious the general approach - required to report as 'A' only to report as 'D' in following year, or just ignore?

[ESOP Guy]

We have always understood this part of the instructions to mean you don't report the person  with your fact set:

When Not To Report a Participant
A participant who has not been previously reported is not required to be reported on Form 8955-SSA if, before the date the Form 8955-SSA is required to be filed (including any extension of time for filing), the participant:
1. Is paid some or all of the deferred vested retirement benefit (see the Caution),
2. Returns to service covered by the plan and/or accrues additional retirement benefits under the plan, or
3. Forfeits all the deferred vested retirement benefit.

If they have been paid before the form is due they aren't reported.  

[Kristina]

I agree with ESOP Guy, except that one does not have to report the terminee who is paid out before the filing of the 8955-SSA as a A code, BUT one should report the terminee as a D code either for the 2018 year, or the 2019 year. 

[TPApril]

2 hours ago, Kristina said:

I agree with ESOP Guy, except that one does not have to report the terminee who is paid out before the filing of the 8955-SSA as a A code, BUT one should report the terminee as a D code either for the 2018 year, or the 2019 year. 

Kristina - first time hearing that a participant who is never reported as an 'A' would be reported as a 'D'

ESOP Guy - yes thank you, I should have seen that prior to posting my question.

 

[chc93]

My understanding is that the Code D is only to remove the participant from the SSA list... who only gets on the list when reported as a Code A.  So if never reported as a Code A, no need to report as a Code D... how we've done it.

[ESOP Guy]

3 hours ago, Kristina said:

I agree with ESOP Guy, except that one does not have to report the terminee who is paid out before the filing of the 8955-SSA as a A code, BUT one should report the terminee as a D code either for the 2018 year, or the 2019 year. 

Huh?

 

Here is the instructions for the Code D

Code D Use this code for 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 (for example, in the case of a plan termination). Also complete columns (b) and (c). Participants should not be reported under Code D merely because they return to the service of the plan sponsor.

 

These people haven't been reported previously so why use a D now? 

[Kristina]

While the instructions say that a D code is used for previously reported participants, a D code for one not reported or for whom a A code can not be verified, precludes questions years down the road.

 

Oh, and IRS/SSA do not seem to tie A codes and D codes together.

[ESOP Guy]

38 minutes ago, Kristina said:

While the instructions say that a D code is used for previously reported participants, a D code for one not reported or for whom a A code can not be verified, precludes questions years down the road.

 

Oh, and IRS/SSA do not seem to tie A codes and D codes together.

This I 100% agree with.  I am a firm believer in, "if in doubt D".   If you aren't sure the person was reported with an A before send the D through.   That is so much less effort than proving the person was paid out years after the fact. 

 

Likewise, I have not ever seen an example where someone got blow back from the IRS saying you reported a D and there never was an A.