On June 3rd, the IRS announced a pilot compliance program. Under the program the IRS will notify plan sponsors that their retirement plan may be selected for an upcoming examination. The letter gives plan sponsors a 90-day window to review their plan’s operation and respond.
At the time of this writing IAI has not been alerted that any of our clients have received a letter. However, just because you receive a letter does not mean you did something wrong, nor does it mean your plan has a compliance error. If you have a plan with IAI and you receive a letter, please forward the letter to your consultant so we may assist.
If the letter leads to a review that uncovers errors or mistakes, you may be able to self-correct the mistakes. If the errors are not eligible for self-correction, you may be able to use the Voluntary Correction Program (VCP). No matter the scenario, IAI is available to assist in your qualified plan’s operation.
If you do not respond to the letter within 90 days, the IRS will contact you to schedule an exam. IRS exams are often expensive and stressful, even when your plan is in full compliance.
If you respond to the IRS in a timely fashion and they determine that the plan has met the rules and regulations, or if you have self-corrected any potential issues, you may be eligible to have your case closed, or you may be asked for a limited examination. Both of these scenarios are more pleasant than a full scope plan examination.