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Avoid a Compliance Examination of Your Retirement Plan by Completing Your 401(K) Compliance Check Questionnaire
By Stacie Clifford Kitts, CPA
Are you one of the lucky employers who will receive a letter from the IRS Employee Plans Compliance Unit (EPCU) ? Well, if you have a retirement plan and you are among the 1200 employers selected to complete the 401(k) Compliance Check Questionnaire you will receive your notice this week explaining how to complete it. The notice will direct you to a website asking you to respond to the following topics:
- Demographics
- Participation
- Employer and employee contributions
- Top-heavy and nondiscrimination testing
- Distributions and plan loans
- Other plan operations
- Automatic contribution arrangements
- Designated Roth features
- IRS voluntary compliance and correction programs
- Plan administration
And what if you don’t respond – Well look forward to further action including a possible audit of your plan by the EPCU.
For more information, you can check out the “Retirement News For Employers” spring 2010 newsletter. I have included a copy of it at my Client Resource Center just look under the file named Pension Audit Resources.
If you have questions about completing the form, you should consult with your plan administrator for assistance.
Cool New Stuff From The IRS – Retirement Plan Choice Helper
[Stacie says: This is pretty neat. IRS has a new tool to help employers navigate what type of plan to choose.]
WASHINGTON — The Internal Revenue Service has created a new Web-based tool to help small business owners determine which tax-favored pension plan best suits their needs and how to keep their plans in compliance.
The IRS Retirement Plan Navigator is intended to provide employers with an easy-to-use guide that focuses on three areas: choosing a plan, maintaining a plan and correcting a plan.
By using the navigator, employers may find that choosing and maintaining a pension plan is not as daunting as they thought. Some plan types are less costly and easier to establish than others.
The navigator does not suggest which plan may be best for a specific employer but it does lay out the options to allow them to choose one that best fits their situations. The navigator includes a side-by-side comparison of pension plans and their requirements.
The navigator provides a checklist and suggested resources for maintaining compliance. Pension laws change frequently. Employers can minimize problems by doing a once-a-year review to ensure they maintain compliance.
The IRS also recognizes that mistakes can be made unintentionally, and many errors can be corrected without notifying the agency. The navigator offers suggested options to employers seeking to correct errors and bring their plans back into compliance. Although the Retirement Plan Navigator is aimed at small business owners, it also can help mid-size businesses review their options as well. Individuals who want to better understand their employer’s plan may also find it of use.
The Web-based guide will be kept up to date as pension laws and regulations change.
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