The IRS Employee Plans Division has officially started the second phase of the Pre-Examination Retirement Plan Compliance Program pilot. This program will notify plan sponsors by letter that their retirement plan was selected for an upcoming examination. The letter gives plan sponsors a 90-day window to review their plan’s document and operations to determine if they meet current tax law requirements. If you don’t respond within 90 days, the IRS will contact you to schedule an exam. If your review reveals mistakes in the plan’s documents or operations, you may be able to self-correct these mistakes using the correction principles in the IRS’s voluntary compliance program (EPCRS), described in Revenue Procedure 2021-30. If you find mistakes during your review that are not eligible to be self-corrected, you can request a closing agreement. The IRS will use the Voluntary Correction Program fee structure to determine the sanction amount you must pay under such closing agreement. The IRS will review your documentation and determine if it agrees with the plan sponsor’s conclusions and that you appropriately self-corrected any mistakes. The IRS will then issue a closing letter or conduct either a limited- or full-scope examination. During the first phase of this program, 100 pre-exam compliance letters were mailed to plan sponsors which resulted in a 72% response rate, indicating plan sponsors are eager to take advantage of this program. The IRS’s goal with this program is to reduce taxpayer burden, reduce the amount of time spent on retirement plan examinations, and encourage self-correction. At the end of the second pilot, the IRS will evaluate its effectiveness and determine if it should continue to be part of their overall compliance strategy.
Please contact your Sisterson representative for assistance if your retirement plan is selected under the pilot program.
