Form 8955-SSA, officially known as the Annual Registration Statement Identifying Separated Participants with Deferred Vested Benefits, is a critical document for retirement plan administrators.
It is used to report information about former employees who have vested benefits in an employer-sponsored retirement plan but have separated from service.
The form ensures that the Social Security Administration (SSA) can notify these individuals about their benefits when they become eligible to claim them during retirement.
Purpose of Form 8955-SSA
The primary purpose of Form 8955-SSA is to maintain transparency in retirement planning by:
- Informing the SSA about separated employees with deferred vested benefits.
- Ensuring individuals are notified of their entitlements when they apply for Social Security benefits.
- Preventing lost or forgotten retirement benefits for former employees.
Who Needs to File Form 8955-SSA?
Retirement plan sponsors or administrators are responsible for filing this form. It applies to plans subject to the Employee Retirement Income Security Act (ERISA), such as 401(k)s and pension plans. The form must report:
- Employees who have terminated employment but still have a balance in the plan.
- Individuals previously reported but whose status has changed, such as receiving full distributions or corrections to prior filings.
Filing Deadlines and Extensions
The filing deadline for Form 8955-SSA aligns with Form 5500, which is typically seven months after the close of the plan year (e.g., July 31 for calendar-year plans). An extension of 2.5 months can be requested using Form 5558.
Penalties for Not Filing or Late Filing
Failing to file Form 8955-SSA on time can result in significant penalties:
- Incomplete Filing Penalty: $10 per day per participant not reported, up to a maximum of $50,000 per plan year.
- Late Filing Penalty: $25 per day with no maximum limit.
- Additional penalties may apply for intentional non-compliance.
These fines can quickly add up, making timely and accurate filing essential for plan sponsors.
Consequences of Non-Filing
Beyond financial penalties, failure to file can lead to:
- Increased scrutiny from regulatory authorities, including potential audits.
- Delays in notifying former employees about their retirement benefits.
- Reputational damage for employers and administrators.
How to Address Missed Filings
If you miss the deadline, it’s crucial to act promptly:
- File the form as soon as possible, even if late.
- Utilize the Employee Plans Compliance Resolution System (EPCRS) to correct errors and bring the plan back into compliance.
- If both Form 5500 and Form 8955-SSA are late, correcting the former through the Department of Labor’s Delinquent Filer Voluntary Compliance Program may also address the latter.
To avoid penalties and ensure compliance:
- Work closely with your service provider or third-party administrator to prepare and submit Form 8955-SSA.
- Double-check participant data for accuracy before submission.
- Request extensions when necessary to meet deadlines.
By staying proactive and organized, plan sponsors can maintain regulatory compliance, protect participants’ benefits, and avoid costly penalties.