June 7, 2010

IRS’ Compliance Questionnaire: 401(k) Plans

As part of an IRS compliance project, the agency is sending out approximately 1,200 questionnaires to a randomly selected group of 401(k) plan sponsors.  The goals of the questionnaire are to determine any potential compliance issues or plan operational issues, as well as to determine whether any additional education or guidance from the IRS would be beneficial for improving compliance.  The scope of the questionnaire includes the following topics:

  • Demographics;
  • 401(k) plan participation;
  • Employer and employee contributions;
  • Top heavy and nondiscrimination rules;
  • Distributions and plan loans;
  • Other plan operations;
  • Automatic contribution arrangements;
  • Designated Roth features;
  • IRS voluntary compliance programs; and
  • Plan administration

Plan sponsors receiving the questionnaire are encouraged to follow the instructions they are provided, in order to complete it via designated internet portal.  While it is not mandatory to comply with the questionnaire, it would be prudent for plan sponsors to provide the requested information, or it could trigger an additional investigation of its plan.  The questionnaire must be completed within 90 days of receiving the IRS notification letter.


The information contained in this Benefit Beat is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations.

As required by U.S. Treasury rules, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained in this Benefit Beat is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service.

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