Form 8955-SSA FAQs

What information is required to be reported on the Form 8955-SSA?

The form requires the plan sponsor to report any participant who terminated in a prior year and is still due a vested benefit from the plan as of the reporting date. For example, the form for the 2020 plan year, must report any employee who terminated in 2019 and still has a balance in the plan as of the date the form is filed.

The form must include the social security number, name and vested benefit due for each participant who is required to be reported.

What happens when an employee gets takes a distribution from the plan?

The form includes a way to update previously reported information to reflect that a participant has taken a full distribution and no longer has any benefit due from the plan. Although this reporting is optional, we highly recommend doing it, as we explain below.

For our ongoing clients, DWC monitors those who have previously been reported and will “unreport” them when we see that they have taken a full distribution.

How is the Form 8955-SSA information used by the government?

Although filed with the IRS, the information is shared with the Social Security Administration (SSA) who maintains it in a database. When individuals apply for Social Security benefits, SSA queries its database and notifies applicants that they are entitled to benefits from the plan.

This is why we suggest un-reporting former employees once they have taken a full distribution. That employee may not remember that they already received their money from the plan, and it can be a tall order to try to explain that fact when they are holding an “official” letter from the government that says they are entitled to a benefit.

What is the filing deadline? Can I extend the Form 8955-SSA?

Although it is a completely separate, stand-alone form, the deadline for filing the Form 8955-SSA is the same as the deadline to file Form 5500, i.e. seven months after the close of the plan year. Also like the Form 5500, the deadline can be extended by 2 ½ months by submitting Form 5558.

How do does a plan sponsor file the Form 8955-SSA?

Typically, the firm preparing your Form 5500 will also prepare the Form 8955-SSA, and the IRS accepts both electronic and paper filing. DWC electronically files the forms on behalf of its clients in a batch submission. All you have to do is approve the draft that we send you for review. 

Are their penalties for filing the Form 8955-SSA after the deadline?

Yes. There are actually 4 types of penalties that could apply to a late filing. The two most likely to apply are as follows:

  • $1 for each day the form is late for each participant that is required to be reported (up to a maximum of $5,000 per plan year); and
  • $25 for each day the form is late (with no maximum).

Additional information about these penalties is available on the IRS website here.

How do I pay the penalties? Do I send them in when I file the form?

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.

There has be an increase in telephone scams in which a caller claims to be from the IRS and demands payment of a penalty. It is important to note that that in the event a penalty is assessed, the contact you receive from the IRS will be by letter sent via U.S. mail.

Is there a delinquent filer program that I can use to voluntarily correct the late filing?

Sort of, but not really. First of all, the IRS recommends filing the form as soon as possible after you discover that it’s late. As noted above, if they decide to assess a penalty, they will contact you directly.

However, if your Form 5500 for the year is also late and you correct that via the Department of Labor’s Delinquent Filer Voluntarily Compliance Program, you also get “credit” for having corrected your late Form 8955-SSA.

Where can I find out more information about Form 8955-SSA?

If you have questions about the Form 8955-SSA filing requirement, please contact DWC at 651.204.2600. The IRS has also posted an FAQ on its website.

Contact DWC

The views expressed in this blog are those of the authors and do not necessarily represent the views of any other person or organization. All content is provided for informational purposes only and is not intended to be tax or legal advice.