Form SSA. As previously discussed, the Schedule SSA will not be a part of the Form 5500 under EFAST2. Instead, it will become a form filed directly with the IRS. The new form will be “Form 8955-SSA." The IRS does not intend to make any changes in the form except to include some identifying information on the first page. The IRS indicated that it intends to keep the bar codes on the form so the IRS will need to make arrangements for the form to be scanned. The IRS also indicated that it is modifying the regulations to reflect the change from an attached schedule to the Form 5500 to an independent form. The IRS is planning on having the Form SSA subject to electronic filing in 2011.
Filing status (Filing Error and Filing Stopped). The DOL confirmed that it will consider a 5500 filing which receives a status of filing error or filing stopped as having been filed. Of course, the preparer will need to take action to correct the errors. The DOL will communicate the status with an email to the filing author (under IFILE) or the transmitter (private web based system). Under IFILE, the filing author will logon on to IFILE to determine the errors. A preparer using a private web based system should be able to determine the errors through that system. The DOL indicated that neither the email containing the status report nor the message communicating the errors will specify a deadline by which the employer needs to correct the error. Nevertheless, the DOL recommends that the employer make the corrections as soon as possible. The DOL will have access to the filings with errors shortly after they have been filed. Based on their enforcement policy and the seriousness of the error, DOL enforcement will make the determination as to how quickly it will send out a letter threatening penalties unless the employer corrects the errors.
Plan audits. The DOL confirmed the importance it attaches to the audit. The DOL will consider a 5500 filing which does not include the required audit as filed, but its status will be filing error. Unlike EFAST, where the DOL generally has taken up to 150 days to process a filing, under EFAST2 the DOL will be aware of the failure to include the audit immediately after filing. The DOL did not indicate how long it would wait before it issues a 45 day letter threatening the penalties unless the employer corrects the failure to include an audit. However, with the importance it attaches to the audit, an employer should not expect a long period of time to correct the failure.
Short 2009 plan years. The 2008 Form 5500 instructions indicate that plans with a 2009 short plan year which have a 5500 filing deadline before January 1, 2010, may file a paper 5500 using the 2008 forms or are eligible for an automatic extension of 90 days following the date electronic filing becomes available. The result of this policy is that plans with short years having a deadline after December 31, 2009 (e.g., plans which terminate after May 31, 2009) have no option but to wait for electronic filing. DOL and IRS officials seemed surprised by this result and indicated that the DOL will not reject a paper filing for any plan with a short 2009 plan year, regardless of its deadline.
Sharing credentials. In obtaining credentials, the person obtaining the credentials must electronically sign an affidavit agreeing that he/she will not share the credentials with anyone, including with a 5500 preparer. Many preparers are concerned that their clients will not be able to manage this step. Others are concerned that the restriction will prevent them from using desktop software on behalf of their clients. Accordingly, we asked the DOL the question many practitioners have asked us – what is the consequence of sharing the credentials? The DOL declined to provide us with a specific consequence, but DOL representatives did indicate that if the filing had a legal issue and the employer had shared its credentials (i.e., the TPA, rather than the employer, entered the credentials), sharing credentials possibly could create a legal issue for both the employer and the preparer. It is possible that if an employer denies knowledge of and responsibility for an entry on the 5500 by asserting it (the employer) gave the credentials to the preparer and did not actually sign the return, the DOL could simply treat the return as an unfiled return (treating the failed signature as a material omission in the filing), and as a result impose significant late filing penalties.
Signing ceremony. The DOL also confirmed that if the preparer or employer modified anything in the filing after entering the electronic signature and before the transmission to the DOL, the signatures would be voided and the employer would need to go through the signing ceremony again.
Example: Assume the preparer had completed the 5500 and had invited the employer to enter his/her filing signer credentials through the Internet. However, after entering the credentials but before transmitting the filing to the DOL, the preparer attaches the plan audit. The signatures will be voided and the employer would need to re-enter his/her signing credentials.
Three Fall Workshops for Retirement Plan Professionals - October - December. 22 cities
In two days we will provide a pair of half-day programs to help you prepare for EFAST 2 and to use forms, notices, and other material to streamline your practice. The following day will feature our full-day ERISA Workshop, an opportunity to go in depth on some of the thorny issues that plague retirement plan practitioners. Choose the programs and location that fit your needs and budget. Register now!
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