The IRS on March 11 updated its web page on the Employee Plans Compliance Unit (EPCU) Non-Governmental 457(b) Plans Excess Deferrals Project.
Section 457 plans may allow participants to make ‘catch-up’ deferrals during the three-year period immediately preceding the year in which they attain normal retirement age if they have not deferred the maximum amount for all prior years of participation in the plan. The IRS will contact non-governmental sponsors of 457(b) plans with participants whose contributions exceed a statutory annual limit.
Why the IRS sends EPCU compliance check letters. EPCU compliance check letters are sent if IRS records show that one maintains a non-governmental 457(b) plan and filed a Form W-2 for 2013 showing contributions to the plan exceeding $17,500 for any participant.
What the EPCU is attempting to determine. The project goals are to:
1. verify that the plans comply with contribution limits; and
2. recommend possible ways to remove any barriers to compliance.
EPCU correspondence to solicit information about plan contributions will focus on the following items:
1. verification that the deferrals reported on Forms W-2 are accurate; and
2. determining if catch-up contribution calculations are in compliance.
If a plan is not established or operated in accordance with federal Internal Revenue Code Section 457(b), the IRS will inform a plan sponsor of our conclusions and actions that may need to be taken as a result.
What a letter signifies. An EPCU Compliance Check letter initiates a compliance check. The IRS will not inspect books and records to determine a liability for a particular tax period. However, if a recipient does not respond, the IRS may take other measures to ensure compliance, including an examination of the plan or organization.
Actions to take when receiving a letter. Those who receive letters should provide a timely response. Keep the following in mind.
More information is available here:
457(b) Plan Contribution Limits
457(b) Plans
EPCU Request for Information on 457(b) Plan Contributions
Section 457 plans may allow participants to make ‘catch-up’ deferrals during the three-year period immediately preceding the year in which they attain normal retirement age if they have not deferred the maximum amount for all prior years of participation in the plan. The IRS will contact non-governmental sponsors of 457(b) plans with participants whose contributions exceed a statutory annual limit.
Why the IRS sends EPCU compliance check letters. EPCU compliance check letters are sent if IRS records show that one maintains a non-governmental 457(b) plan and filed a Form W-2 for 2013 showing contributions to the plan exceeding $17,500 for any participant.
What the EPCU is attempting to determine. The project goals are to:
1. verify that the plans comply with contribution limits; and
2. recommend possible ways to remove any barriers to compliance.
EPCU correspondence to solicit information about plan contributions will focus on the following items:
1. verification that the deferrals reported on Forms W-2 are accurate; and
2. determining if catch-up contribution calculations are in compliance.
If a plan is not established or operated in accordance with federal Internal Revenue Code Section 457(b), the IRS will inform a plan sponsor of our conclusions and actions that may need to be taken as a result.
What a letter signifies. An EPCU Compliance Check letter initiates a compliance check. The IRS will not inspect books and records to determine a liability for a particular tax period. However, if a recipient does not respond, the IRS may take other measures to ensure compliance, including an examination of the plan or organization.
Actions to take when receiving a letter. Those who receive letters should provide a timely response. Keep the following in mind.
- If the IRS sent the letter erroneously, it asks that the recipient explain its circumstances.
- One may furnish other documents or clarifying material that may will be helpful for the EPCU to review.
- Answer the questions as completely and accurately as possible.
More information is available here:
457(b) Plan Contribution Limits
457(b) Plans
EPCU Request for Information on 457(b) Plan Contributions
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