Filing Form 8955 for Multiple Years in DFVCP

[WolverineBenefits]

Assume that a company missed 5 years of 5500 filings and is preparing to submit them through DFVCP. The auditor has explained that in cases like this, it is their practice to only file the 8955 for the most recently missed 5500 filing, since the prior data is "outdated" by the form is filed. 

Thought on this approach? I don't see this as acceptable. 

Thanks.

[Paul I]

Take a look at IRS Notice 2014-35 https://www.irs.gov/pub/irs-drop/n-14-35.pdf.  It supports your position.

Consider that the purpose of the 8955 is to identify participants who have deferred vested benefits so that they can receive a notice when they reach retirement age.  The instructions to the form says not to report anyone you know has been paid or has started payments.  Also consider that you have until the filing deadline for the 8955 to determine if a participant is reportable (i.e., has not yet been paid out).  Taking advantage of this knowledge about a participant's current status may greatly simplify the filings.

 

[WolverineBenefits]

2 hours ago, Paul I said:

Take a look at IRS Notice 2014-35 https://www.irs.gov/pub/irs-drop/n-14-35.pdf.  It supports your position.

Consider that the purpose of the 8955 is to identify participants who have deferred vested benefits so that they can receive a notice when they reach retirement age.  The instructions to the form says not to report anyone you know has been paid or has started payments.  Also consider that you have until the filing deadline for the 8955 to determine if a participant is reportable (i.e., has not yet been paid out).  Taking advantage of this knowledge about a participant's current status may greatly simplify the filings.

 

How do square that with the fact that the IRS only honors DFVC if the 8955 is filed? The notice states "this notice provides relief from the penalties applicable under the Code to the late filing of Forms 5500 and 5500-SF only if any applicable Form 8955-SSA is also filed for the year at issue." There could be years which the employer would have had to file the 8955 if the 5500 had been filed on time but based on today's data would not. I am concerned that the IRS would not honor the DFVCP. (I know that we are largely talking about audit risk.)

[Paul I]

I have found the IRS not to want to pursue penalties just because they could as long as everything has been restored to its proper place.  The 8955 information held by the SSA would be correct under either scenario.  I also assume that the plan provided statements to every terminated vested participant with all of the required information and could answer to that question on the 8955.  Otherwise, there could be penalties for a failure to provide a statement.

If you wish to be very conservative or are dealing with other operational issues, then file the SSA for each year based on the facts known at the time the filing should have been made.

 

[WolverineBenefits]

This is not the only compliance issue for this plan so there is a desire to be as thorough as possible with fixing things.