In an effort to reduce taxpayer burden as well as time spent by the Internal Revenue Service (IRS) on retirement plan examinations, the IRS announced its Employee Plans function is piloting a pre-examination retirement plan compliance program, which began in June 2022.
Retirement plan sponsors that have been selected to participate in this pilot program will receive a notification letter and be given 90 days to review their plan’s document and operations to determine whether current tax law requirements are being met. If the IRS does not receive a plan’s response within 90 days, the IRS will contact the sponsor to schedule an examination.
If mistakes in the plan’s documents or operations are found during the sponsor’s review, a self-correction may be possible via the voluntary compliance program (VCP). Mistakes that cannot be corrected with the VCP may be addressed by requesting a closing agreement and, if accepted, a fee established by the VPC will be determined and paid under the closing argument. If the IRS is in agreement with the self-corrections, a closing letter will be issued. If the IRS is not in agreement with the self-corrections, a full or limited-scope examination will be conducted.
For more information, contact Diane Straka, CPA, Partner/Tronconi Segarra & Associates Small Business Department at 716.633.1373 or dstraka@tsacpa.com.
