TN 24 (05-98)

A. Background

The SSA-131 "Employer Report of Special Payments” form was developed at the request of the payroll community, to be used in reporting special payments to SSA in individual situations. The intent is to have a standard form that employers are familiar with and that can be sent to employers and returned directly to SSA.

B. Policy

The form should be used when the:

• beneficiary alleges a special payment, but is unsure of the amount of the payment; this would commonly occur in the initial claim situation where the beneficiary is filing for benefits before or soon after retirement, some type of special payment is due from the employer, but the amount of the payment has not been calculated or paid to the beneficiary at the time he or she files for SS benefits.

• beneficiary alleges a special payment, but the alleged amount seems questionable or unreasonable; the form would be used in this situation to verify the amount of the SP.

• employer has requested forms that will be routinely completed and sent to SSA when a retiring employee will receive special payments and is expected to file for Social Security benefits;

• employer has contacted SSA and requested the form SSA-131 based on referral to the form through IRS Publication 957, or based on the instructions for completing the "nonqualified plan" box on the W-2.

NOTE: Employers requesting large quantities of SSA-131 forms should be questioned regarding the intended use of the form. Remind the employer that SSA only needs special payment information for Social Security beneficiaries. If employers are unsure of who is receiving benefits, remind them that SSA will initiate development when the information is needed for a case. For an exhibit of Form SSA-131, view PDF version.

C. Procedure

1. Contacting the employer - completing Part 1 (SSA-131)

If the beneficiary provides an affirmative response on the application regarding the receipt of some type of special payment(s) after retirement, but does not know how much the payment will be, or alleges a special payment in a PE situation, but is not sure of the amount, the adjudicator should send the SSA-131 to the employer.

Complete Part 1 of the SSA-131, showing:

• The Tax Year for which the information is needed,

• The Employee Name, SSN, and SSA Claim Number,

• The employer Name and Address,

Send the form under cover letter, telling the employer that the individual has filed for Social Security benefits and the information requested on the form is needed to ensure correct payment of benefits. Allow 30 days for reply. If no response, send a second request.

2. Post-entitlement

Use of the SSA-131 in PE situations will most often occur as a result of a beneficiary protest of an enforcement action. When this occurs, a reasonable allegation of special payments by the beneficiary can be accepted and input without further development. However, if the beneficiary is unable to provide an accurate dollar amount that should be excluded, or simply alleges that he or she received a payment that shouldn't count without providing a dollar amount, or if the alleged special payment amount seems unlikely or unreasonable, e.g. retirement date other than the 1st of the year and alleges that all earnings should be excluded, send the SSA-131 to the employer. If necessary, use the information on the DEQY to obtain the employer address. Complete Part 1 of the form as shown above and send under cover letter. Allow 30 days for reply. If no response, send a second request.

D. Procedure - evaluating the SSA-131 information

1. Box 1

Obtain a DEQY to verify the Employer EIN for the year in question. If the employer did not show the EIN, use the EIN for the employer as shown on the DEQY when inputting the SWP.

2. Box 2

"Retirement Date" and Box 3. "Date employee last performed services" — The information in these boxes are used to help evaluate the special payment information provided by the employer.

EXAMPLE: The beneficiary has a retirement date of 03/01/98, but last performed services 12/10/97. The employer shows all wages paid in 1998 were special payments. This would not seem reasonable if we only knew the retirement date (03/01/98). However, since the beneficiary last performed services in 12/97, the information can be accepted as correct.

If, however, the beneficiary retired 03/01/98 AND last performed services on 02/29/98, AND the employer shows all wages paid in 1998 were special payments, additional contact would be needed. It would appear that based on the information provided, some of the 1998 wages would have been EARNED in 1998.

NOTE: The employer does not have to complete box 2 or 3. Nor is an explanation of the difference between Box 2 and Box 3 required in order to accept the information on the SSA-131.

3. Box 4

This is the special payment amount that should be input to the MEF.

If the SP is for the prior year, check the DEQY prior to input, to verify that earnings are posted for the employer. Do not input if a special payment is already shown for the same employer ("DB" posting") that is equal to the amount shown in Box 4. If additional special payments are shown on the SSA-131, input the special payment using the "V" coding to overlay the prior posting (See RS 02510.017B.4). Do not input a special payment that is greater than the total earnings reported by the employer. Also, do not input an amount equal to the total earnings reported if both the retirement date shown in Box 2 and the date last performed services in Box 3 are after the 1st of the year. Recontact the employer to clarify the special payment amount, since all of the earnings for the year should not be excluded if the beneficiary performed some services during the year. (See the example shown above.)

If the employer did not complete Box 4, check to see if amounts are shown next to the boxes checked below Box 4. If so, total the amounts and input the total as the special payment amount.

If the employer shows "none" or "0" in Box 4, no further action is required.

4. Box 5

This box does not have to be completed by the employer. However, if the employer indicates that payments will be made in future years and the amounts are shown, input the special payment for the current year and as much as 2 future years using the WP01 screen. (See MSOM EM 001.002 through MSOM EM 001.004.) If the employer reports that payments will be made more than 2 years in the future, diary for input of the special payments.

5. Box 6

This box should be completed by employers who were referred to the SSA-131 from the instructions on completing the W-2 form, or the IRS Publication 957.

NOTE: Employers usually report distributions from nonqualified deferred compensation plans and 457 plan distributions in box 11 of the W-2 form. However, in certain instances, it is not possible to provide adequate instructions on showing the information in box 11 of the W-2 that would allow SSA to correctly determine the correct earnings for deduction purposes. This happens when an employee made payments to a deferred compensation plan during the tax year, AND became vested in the plan during the same year resulting in a lump sum of prior contributions being subject to FICA tax, AND retired and began receiving distributions from the plan in the same year. In this situation, employers are instructed not to provide information in Box 11, "Nonqualified plan" of the W-2, but rather complete an SSA-131 to provide SSA with the special payment information.

The amount reported in Box 6 represents the beneficiary's earnings for deduction purposes and should be input via the PEEN screen. The amount shown in Box 4 should be input as a special payment.

REMINDER: Some employers may have incorrectly reported amounts in Box 11 of the W-2 and then complete an SSA-131 to try to correct the amount reported in Box 11 of the W-2. Amounts reported in Box 11 of the W-2 should not be shown in Box 4 on the SSA-131. If an employer shows no entry in Box 4 of the SSA-131, but completes item 6, development will be necessary to ensure the accuracy of the amount reported in Box 11 of the W-2. Recontact the employer for clarification, or contact the beneficiary. Use the PEAR screen to input the annual report if the beneficiary gives the information. Use the PEEN screen to input the earnings if the information is provided by the employer. To determine the special payment amount, take the amount in either Box 1 of the W-2 (Total Comp), or Box 5 (Medicare wages) whichever is higher, and subtract the amount the beneficiary actually earned during the year. The result should be input as a special wage payment. If the employer already reported a special payment on the W-2, but that amount is not correct, use the "V" code when inputting the special payment (RS 02510.017A.2.a.).

6. When to contact/recontact the employer

The SSA-131 was designed to assist SSA in getting special payment information from employers. Members of several payroll associations requested that a specific form be developed for use in special payment situations. Use of the form should prove helpful to SSA in getting special payment information, to employers in providing the information to us, and to beneficiaries in having their benefits correctly adjusted.

Adjudicators should be mindful of the timeframes for retirement, retirement benefit calculation/payment and the Annual Wage Reporting (W-2) cycle when using the SSA-131 to request special payment information from the employer. For example, in a post-adjudicative situation, where a beneficiary responds to an enforcement notice, alleging a special payment and employer contact is required, it would be reasonable to request a response in 30 days and follow-up with a second request if a reply is not received within that time period. This is because the tax year has already ended and the payments have already been made. On the other hand, if a beneficiary files a claim in September, and states that he/she will retire November 30 and will receive some type of special payment from the employer, it would not be reasonable to make a request for special payment information at that time and expect a reply within 30 days. Instead, send the SSA-131 to the employer, requesting that the form be completed after the employee has retired and the information requested is known. A reasonable diary date for follow-up in this case would be January 30 (after the close of the tax year).

REMEMBER: The form is not routinely required for verification of special payments. If the beneficiary knows the amount of the payment, or the employer has provided some other statement showing amounts that can be excluded under the earnings test, there is no need to use the SSA-131.

If there is no response from the employer to a second request for special wage payment information, the beneficiary should be told that the employer did not respond, if the request was initiated based on information provided by the beneficiary.