What Is IRS Form 8955-SSA Used For?
Understand how Form 8955-SSA helps the Social Security Administration connect former employees with deferred retirement plan benefits they have earned.
Form 8955-SSA, the Annual Registration Statement Identifying Separated Participants With Deferred Vested Benefits, is an informational return filed with the Internal Revenue Service (IRS). Its purpose is to report former employees who have left a company but are still entitled to a future retirement benefit from the company’s plan. The IRS forwards this data to the Social Security Administration (SSA).
When a former employee eventually applies for Social Security benefits, the SSA uses the data from Form 8955-SSA to remind that individual about the retirement funds they have waiting. This process helps ensure that individuals do not forget or lose track of retirement money they earned over their careers.
Who Must File Form 8955-SSA
The responsibility for filing Form 8955-SSA falls to the plan administrator of a retirement plan, including common plans like 401(k)s, pension plans, and profit-sharing plans. The filing requirement is triggered when a participant separates from service during the plan year and is entitled to a deferred vested benefit.
A “deferred vested benefit” means the participant has earned a right to a portion of their retirement account, but they have not yet been paid that amount. They will receive it at a future date, typically upon reaching retirement age. If an employee leaves and immediately rolls over their 401(k) or takes a full distribution, they would not be reported on Form 8955-SSA because they have already received their benefit.
Information Required for Completion
Completing Form 8955-SSA requires specific details about the retirement plan and the participants being reported. The form is divided into three main parts. Part I captures general plan information, including the name of the plan sponsor, the sponsor’s Employer Identification Number (EIN), the official name of the retirement plan, and the three-digit plan number.
Part II identifies the plan administrator by name and address. The most detailed section is Part III, which lists the individual participants. For each separated employee with a deferred vested benefit, the filer must provide their Social Security Number and full name. The form also requires codes to describe the participant’s status, such as “Entry Code A” for a participant being reported for the first time, along with the type of annuity, payment frequency, and the total value of the vested benefit.
The Filing Process
The plan administrator must submit Form 8955-SSA by the last day of the seventh month following the end of the plan year. For a standard calendar-year plan ending on December 31, the deadline is July 31 of the following year. If more time is needed, an extension can be requested by filing Form 5558, Application for Extension of Time to File Certain Employee Plan Returns, on or before the original due date.
A properly filed extension provides an additional 2.5 months to submit the form, pushing the deadline to October 15 for a calendar-year plan. Filing must be done electronically through the IRS’s Filing Information Returns Electronically (FIRE) system. Electronic submission is mandatory for filers who are required to file 10 or more returns of any type during the calendar year. Using the FIRE system requires an account and a specific Transmitter Control Code (TCC).
Post-Filing Considerations
After Form 8955-SSA is filed, the SSA uses the data to create a record for each individual. When that person later files for Social Security benefits, the SSA provides them with a statement detailing the deferred vested benefit, reminding them to contact their former plan administrator to claim their funds.
Information reported on a previously filed Form 8955-SSA may need to be corrected if a participant’s status changes. For instance, if a previously reported participant is later paid out their full benefit, they must be removed from the list. This is done by filing a new Form 8955-SSA for the year the change occurred and using “Entry Code D” to indicate the participant is no longer entitled to a deferred vested benefit.
Failure to comply with filing requirements can lead to penalties. The IRS can assess a penalty of $10 per unreported participant for each day the failure continues, up to a maximum of $50,000 per plan year. These penalties underscore the need for diligent record-keeping and timely filing.