IRS Sets Another Course for Pre-Check Compliance Program
Are you the sponsor of a qualified retirement plan? If so, you may be interested in a pilot program offered by the IRS that can help you fix mistakes in your plan. The program, which has been extended, allows plan sponsors to review their plans and voluntarily correct any errors they find. This can help you avoid costly audits and penalties down the road.
How the program works
Under the IRS pilot program, plan sponsors will receive a notice from the IRS letting them know that their plan has been selected for review. Once you receive the notice, you will have 90 days to review your plan and make any necessary corrections. The IRS will use a voluntary correction program to determine any penalties that may apply. This program is generally more lenient than the IRS’s audit process and can help you avoid significant fines.
What types of mistakes can be corrected?
The IRS pilot program allows plan sponsors to correct a variety of mistakes in their plans. Some common mistakes include:
- Operational errors: These are errors in how the plan is administered, such as failing to follow the plan document or making benefit calculation mistakes.
- Document errors: This category refers to plan document errors, such as eligibility requirements or vesting schedule errors.
- Reporting errors: Include errors in how the plan is reported to the IRS, such as failing to file the required forms or filing them incorrectly.
Benefits of participating in the program
There are several benefits to participating in the IRS pilot program. Here are a few of the more notable:
- Avoid audits and penalties: By voluntarily correcting mistakes in your plan, you can reduce the risk of being audited by the IRS. You may be subject to significant penalties if you are audited and the IRS finds errors in your plan.
- Save money: Correcting mistakes in your plan can save you money in the long run. If you wait until you are audited to fix errors, you will likely have to pay penalties in addition to the cost of correcting the errors.
How to participate in the program
If you receive a notice from the IRS that your plan has been selected for the pilot program, you should carefully review the notice and follow the instructions provided. You may also want to consult with a qualified retirement plan advisor to help you review your plan and make any necessary corrections.
Additional tips for retirement plan sponsors
In addition to participating in the IRS pilot program, you can do several other things to help ensure your retirement plan complies with IRS rules:
- Work with a qualified retirement plan professional: A qualified professional can help you draft your plan document, administer your plan, and stay current on the latest IRS rules.
- Review your plan documents regularly: It is important to review your plan documents regularly to ensure they are still up to date. You should also review your plan documents whenever you make changes.
- Keep good records: It is essential to keep track of your plan documents and filings. This will make complying with IRS audits much easier.
Feeling overwhelmed by managing your retirement plan? Savant’s knowledgeable advisors can help you navigate every step, from staying current with IRS requirements to building an investment strategy aligned with your company’s goals. Together, we can create a retirement plan that helps empower your workforce to build financial security in retirement.
This blog is for informational purposes only and should not be considered legal advice. Please consult a qualified retirement plan professional for advice on your specific situation.
Patricia L. Hutchinson
Director of Retirement Plan Services