IRS Pilots Pre-examination Retirement Plan Compliance Program

The IRS on June 3 announced that it is piloting a pre-examination retirement plan compliance program beginning in June 2022. 

This program will notify a plan sponsor by letter that their retirement plan was selected for an upcoming examination. The letter will give a plan sponsor a 90-day window to review its plan document and operations to determine if they meet current tax law requirements. 

If a recipient of the letter does not respond within 90 days, the IRS says it will contact the recipient to schedule an exam. 

If a Plan Sponsor Finds Mistakes 

If a plan sponsor discovers in their review that mistakes were made in the plan’s documents or operations, the IRS reminds that it may be possible for the plan sponsor to self-correct those mistakes through the Employee Plans Compliance Resolution System (EPCRS) and as described in Revenue Procedure 2021-30.

If a plan sponsor finds mistakes during its review that cannot be self-corrected, the plan sponsor can request a closing agreement. The IRS notes that it will use the Voluntary Correction Program fee structure to determine the sanction amount to be paid under a closing agreement. 

IRS Actions

The IRS says that it will review documentation and determine if it agrees with a plan sponsor’s conclusions and whether any mistakes were appropriately self-corrected. It will then issue a closing letter or conduct either a limited or full scope examination.