March 2, 2011

IRS Reviews 401(k) Questionnaires and Outlines Next Steps for Compliance

Last summer, the IRS began a process of sending out random questionnaires to 401(k) plan sponsors for purposes of determining potential compliance issues or plan operational issues (see IRS’ Compliance Questionnaire: 401(k) Plans, from the June, 2010 edition of Benefit Beat).  In the Winter, 2010 edition of an IRS newsletter, Monika Templeman, the Director of the IRS’ Employee Plan Examination division, indicated the next steps in this process.  Of particular note, the IRS intends to conduct full-scope examinations of those plans whose sponsor failed to respond to the 401(k) Questionnaire.  The IRS encourages plan sponsors to review the Questionnaire’s instructions (available on-line here) as an internal control tool; and, then utilize available IRS correction programs to fix errors.  It is important for a plan administrator that receives the audit request to attend to it carefully.


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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