On June 3, 2022, the IRS announced a new pilot pre-examination
compliance program for retirement plans beginning in June 2022. Under the new program, the IRS will send
letters to plans advising them that they have been selected for an examination
and will have a 90-day window to self-review the plan’s documentation and
operation to determine if they meet current tax law requirements. If the plan
does not respond within 90-days, the IRS will audit the plan. If self-review reveals
non-compliance, the plans will be able to self-correct the mistakes using the
correction principles in the IRS voluntary compliance program (EPCRS).
EPCRS’s self-correction program will be available. If a
mistake cannot be self-corrected, an IRS closing agreement under EPCRS will be
available based on the voluntary compliance program (VCP) fees rather than the
normal closing agreement fees.
If the plan does respond within 90 days, the IRS will review
the submitted documentation, determine whether it agrees and enter into a
closing agreement. If the IRS does not fully agree that appropriate corrections
have been made, the IRS will conduct either a limited or full scope
examination.
The IRS views the program as a way to reduce the taxpayer
burden and the amount of time that the IRS spends on examinations. To date, the
IRS has just issued an announcement of the pilot program but not provided full
details.
For questions or more information in how this program may
affect your plan, please contact us here.
Full IRS Announcement:
https://www.irs.gov/retirement-plans/employee-plans-news
IRS Employee Plans Compliance Resolution System (EPCRS): https://www.irs.gov/retirement-plans/employee-plans-news
IRS Voluntary Correction Program Fees: https://www.irs.gov/retirement-plans/voluntary-correction-program-fees