The new enforcement approach will alert a plan sponsor that their retirement plan was selected for an upcoming review and allow the sponsor to examine their plan’s document and operations to determine compliance. If plan sponsors do not respond within the allotted 90-day window, the IRS will proceed to schedule an audit.
If mistakes are found during the review of documents and operations, there may be an opportunity to self-correct using the rules in the voluntary compliance program (Revenue Procedure 2021-30). If mistakes that are not eligible for self-correction are found, the plan sponsor can request a closing agreement. At that point, the IRS will use the Voluntary Correction Program fee structure to decide the amount to be paid under a closing agreement. After a review of documentation, the Service will determine whether they agree with the conclusions made and review self-corrections and then issue a closing letter or conduct either a limited or full scope audit.
The goal of this program is to reduce the workload for the IRS, which is already facing a massive caseload, and reduce expenses for taxpayers. After a trial run for the program, a decision will be made whether to make it a part of the overall compliance strategy.
UHY will continue to provide updates as new information is released. If you have any questions about how this affects you or would like to review your plan’s document and operations to determine compliance, please reach out to one of our employee benefits specialists or fill out the form on this page to have someone connect with you.
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