Is Your Plan Ready to Respond to an IRS Inquiry?
- October 5, 2022
- Posted by: Jeff Atwell
- Category: Financial Plan, Resources
The close of the year is an opportune time for plan sponsors and advisors to review the compliance of their qualified plan. Remember that all qualified plans have to be in compliance with the Internal Revenue Code, ERISA, and the plan documents at all times.
On June 3, 2022, the IRS announced a pilot program to notify plan sponsors of an upcoming audit 90 days before its commencement. During this 90-day window, plan sponsors have the chance to avoid an examination and the potentially high sanctions which may result by using the principles of the Employee Plans Compliance Resolution System (“EPCRS”) to self-correct or otherwise address mistakes in the plan. You can learn more about EPCRS in the article below.
Several years ago, the IRS conducted a similar audit program and found that over 50% of the plans contacted had some level of compliance defect. The checklist below is provided by the IRS and offers a good starting point to evaluate whether your plan is in compliance and ready to respond to an IRS inquiry.