Purpose of Form 8955-SSA (2021)
The primary purpose of 8955-SSA for 2021 is to provide the IRS with information about separated participants with deferred vested benefits. The form contains details such as the participant's name, social security number, and the amount of their deferred vested benefits.
This information is critical for plan administrators because it enables them to maintain accurate records of all plan participants and their benefits. This, in turn, helps them to ensure that all plan participants receive the benefits to which they are entitled.
Who needs to file Form 8955-SSA 2021?
Form 8955-SSA must be filed by all plan administrators of defined benefit pension plans, including both single-employer and multiemployer plans. A defined benefit pension plan is a retirement plan in which an employer promises to pay a specified benefit amount to eligible employees upon their retirement.
Plan administrators must file Form 8955-SSA for each plan year in which they have separated participants with deferred vested benefits. The form must be filed by the last day of the seventh month following the end of the plan year.
Real-Life Examples
Let's look at some real-life examples to understand the importance of Form 8955-SSA.
Example 1: Company A sponsors a defined benefit pension plan for its employees. The plan administrator fails to file Form 8955-SSA for three consecutive plan years. As a result, the IRS imposes penalties on the plan administrator for failing to file the required form, which could cost the company thousands of dollars.
Example 2: John worked for Company B for ten years before leaving to start his own business. He is entitled to a deferred vested benefit from the company's defined benefit pension plan. However, the plan administrator failed to file Form 8955-SSA, and as a result, John's information is not included in the plan's records.
When John reaches retirement age and applies for his benefits, he finds out that he is not entitled to anything because the plan administrator did not have his information on file.
How to File Form 8955-SSA
Form 8955-SSA can be filed electronically or on paper. Plan administrators can file the form electronically using the IRS's FIRE system, or they can file it on paper by mailing it to the IRS.
When filing Form 8955-SSA, plan administrators must ensure that they provide accurate and complete information for all separated participants with deferred vested benefits. Any errors or omissions can result in penalties and may delay the payment of benefits to plan participants.
Conclusion
Form 8955-SSA for 2021 is a crucial document for plan administrators of defined benefit pension plans. It enables them to maintain accurate records of separated plan participants with deferred vested benefits, ensuring that they receive the benefits to which they are entitled.
Failing to file the form can result in penalties and can cause significant problems for plan participants, as shown in the real-life examples above. If you have any questions about Form 8955-SSA or need help filing it, please consult a tax professional.
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