IRS issues final regs that require filing certain retirement plan returns on magnetic media

The IRS has issued final regulations that require the filing of certain retirement plan statements, returns, and reports under Code Secs. 6057, 6058, and 6059, and (i.e., Form 8955-SSA, Form 5500 series, and Schedules SB and MB) on magnetic media. The term “magnetic media” includes electronic filing, as well as other magnetic media specifically permitted under applicable regulations, revenue procedures, publications, forms, instructions, or other guidance on the IRS website. The final regulations are effective September 29, 2014.

Requirements for filing 250 returns

The final regulations provide that a plan administrator (or, in certain situations, an employer maintaining a plan) required to file at least 250 returns during the calendar year that includes the first day of the plan year must use magnetic media to file statements, returns, and reports under Code Secs. 6057, 6058, and 6059. The determination of whether a filer is required to file at least 250 returns is made by aggregating all returns, regardless of type, that the filer is required to file, including for example, income tax returns, information returns, excise tax returns, and employment tax returns.

Use of FIRE system for filing Form 8955-SSA

The preamble to the proposed regulations had noted that many filers of the Form 8955-SSA already voluntarily file electronically with the IRS, but did not identify the system currently used to file electronically. Commenters expressed concern that not identifying the “Filing Information Returns Electronically” (FIRE) system as the system currently used to file the Form 8955-SSA electronically could imply that the use of the FIRE system is not (or, in the near future, will not be) an acceptable system to file the Form 8955-SSA electronically. In response to this concern, the IRS confirms that the FIRE system is an acceptable electronic system to file the Form 8955-SSA. If, in the future, the IRS replaces the FIRE system with another electronic filing system, sufficient time will be provided to filers of the Form 8955-SSA to accommodate implementation needs.

Electronic filing requirements for one-participant plans

One commenter asked whether one-participant plans that met the 250-return threshold for mandatory electronic filing would now be required to file actuarial reports under Code Sec. 6059 when filing Forms 5500-SF in lieu of paper Forms 5500-EZ. In response, the IRS confirms that a one-participant plan (or a foreign plan) required to file electronically must use the Form 5500-SF to file the information required on the Form 5500-EZ, but will not be required to attach to the filing a Schedule SB or Schedule MB.

Failure to file

The final regulations cover failures to file electronically, penalties, and determinations concerning reasonable cause for failures to file electronically and undue economic hardship. Because the IRS believes that electronic filing will not impose significant burdens on the taxpayers covered by these regulations, it is anticipated that the granting of waivers of the electronic filing requirement will occur only in exceptional cases. The IRS expects to issue guidance that will set forth procedures under which a taxpayer may request a hardship waiver for electronically filing the Form 8955-SSA and the Form 5500 series. The IRS anticipates that the guidance will not provide hardship waiver procedures for any electronic filing requirement for a form that a filer is already required to file electronically, such as Form 5500 and Form 5500-SF.

The IRS notes that a delinquent filing of Form 8955-SSA or Form 5500-EZ that complies with the paper filing requirements in IRS Notice 2014-35 and IRS Rev. Proc. 2014-32, is excluded from the electronic filing requirements under these final regulations.

Applicability dates

In response to commenters’ requests, the final regulations’ applicability dates extend the effective date provided in the proposed regulations. IRS Reg. Sec. 301.6057-3 applies for retirement plan registration statements and other notifications required to be filed under Code Sec. 6057 for plan years that begin on or after January 1, 2014, but only for filings with a filing deadline (not taking into account extensions) after July 31, 2015. IRS Reg. Sec. 301.6058-2 and Reg. Sec. 301.6059-2 apply for returns and actuarial reports required to be filed under Code Secs. 6058 and 6059 for plan years that begin on or after January 1, 2015, but only for filings with a filing deadline (not taking into account extensions) after December 31, 2015.

Commenters specifically requested that the IRS confirm that the use of the existing FIRE system would satisfy the electronic filing requirement for Form 8955-SSA through 2016. In response, the IRS states that, because there is no current plan to change the electronic system used to file the Form 8955-SSA prior to the end of calendar year 2016, and significant changes to the form itself are not anticipated, the final regulations generally retain the proposed effective date for Code Sec. 6057 filings. However, the final regulations do extend the effective date for plans with short 2014 plan years by providing that the regulations only apply to filings with a filing deadline on or after July 31, 2015.

As to the filing requirements under Code Secs. 6058 and 6059, the final regulations extend the effective date by 12 months. As announced in the proposed regulations, the IRS anticipates adding items on the Form 5500 and Form 5500-SF relating solely to Code requirements and intends to provide an optional paper-only form containing those Code-related items for use by small filers. It is expected that the form will be available to satisfy the filing requirements with respect to the 2015 plan year.

Source: 79 FR 58256.

Visit our News Library to read more news stories.