The IRS has just released the 2010 Form 5500-EZ and its corresponding instructions. The new form is essentially identical to the 2009 form, except the 2009 form had only 6 sets of boxes for characteristic codes while the new form has 10 sets.

The instructions are also very similar, with the chief difference being a discussion of the new DB(k) plans authorized in Code §414(x), which have not been widely adopted. The instructions remind us that these plans include both defined benefit and defined contribution elements, and therefore must follow the instructions for both. Thus, an actuary must prepare and sign a Schedule SB (although it is not attached to the 5500-EZ) and the characteristic codes will include both defined benefit and defined contribution codes.

Practitioners are still waiting for the IRS to issue several forms:

• The 2009 and 2010 Form 8955-SSA, the replacement for the old Schedule SSA to Form 5500
• An updated Form 5558 extension request form which takes into account the 8955-SSA

At a recent ASPPA actuarial conference (ACOPA), an IRS official made several announcements relating to these forms:

• While the IRS prefers for practitioners to wait for the new Form 8955-SSA, the IRS will continue to accept the old Schedule SSA. This conflicts with printed, official guidance in Announcement 2011-21, stating that the IRS would accept the old Schedules through April 20, 2011.
• Practitioners can use the existing Form 5558. An extension to Form 5500 thereon will also extend Form 8955-SSA. We have received multiple reports that when practitioners have received letters from the IRS acknowledging receipt of the extension request, the letter has stated that the extension also applied to the Form 8955-SSA.

Our recommendation is that practitioners continue to wait for the new forms, which we expect the IRS to issue shortly. Suppose a practitioner complete the old Schedule SSA and sends it to a client for a signature, and then the IRS issues the Form 8955-SSA before the signed (old) form is submitted. The IRS will not accept the old Schedule SSA and will insist on the new Form 8955-SSA.

Additionally, we wanted to pass along a comment of a well-known practitioner, Larry Starr, relating to this issue, reminding us of some of the problems the government has had in the past with forms handling:

I would suggest that NO ONE follow the advice from the IRS rep at the ACOPA meeting unless you are willing to deal with all the administrative foul-ups that are quite likely to result from that. The IRS is NOT set up to handle what will be incorrect filings (made correct by a verbal statement) because all the SYSTEMS are automated and will most likely NOT be changed to deal with this wrong-year filing. Therefore, it will depend on human intervention at IRS and the likelihood of failure, as most of you will surely agree, somewhere north of 90%!

Larry’s recommendation is the same as ours at this point: extend and be patient.

Form 5500-EZ: Soup to Nuts
Due to the 6/13/11 release of the new Form 5500- EZ, we have rescheduled this Web seminar to 12:00 noon ET on Tuesday, June 28, 2011, to allow speakers time to review the new form and provide you with the most up-to-date information. To register, go to our Web site.

The New Form 8955-SSA: Who, What, When, and How
We have been informed that the IRS will issue the new form imminently! As a result, we have rescheduled this Web seminar to 12:00 noon ET on Thursday, June 30, 2011, to allow speakers time to review the new form, so that you get the most up-to-date information. To register, go to our Web site.

Watch for our upcoming August classroom programs:
Advanced Plan Design Workshop – New 1-day program
401(k) Plans: Beyond the Basics – A 2-day program
Registration available in late June.