By Michael A. DeHaven, CPA and Shareholder, Rainer & Company

Attention all businesses that sponsor retirement plans: The Internal Revenue Service recently announced that it’s piloting a pre-examination retirement plan compliance program that gives you 90 days to audit your plan. Failure to respond can result in steep penalties.

What should retirement plan sponsors do?

Any plan sponsor that receives an IRS Pre-Examination Retirement Plan Notice must respond within a 90-day window and review their plan’s document and operations to determine if they meet current tax law requirements. If you don’t respond within 90 days, the IRS will contact you to schedule an exam.

Rather than wait to receive notice from the IRS, Rainer & Company is recommending that businesses contact their Third-Party Administrator (TPA) immediately to review their plans for errors. The potential for errors is significant, given several amendments to retirement plan documents that were required as a result of the SECURE Act. 

While Rainer & Company doesn’t perform TPA services, we do audit retirement plans and are apprised of all amendments. We are happy to recommend a local TPA to provide the follow-up and support necessary to protect your business. 

What if you find mistakes in your retirement plan documents? 

The IRS says: 

“If your review reveals mistakes in the plan’s documents or operations, you may be able to self-correct these mistakes using the correction principles in our voluntary compliance program (EPCRS), described in Revenue Procedure 2021-30

If you find mistakes during your review that aren’t eligible to be self-corrected, you can request a closing agreement. We’ll use the Voluntary Correction Program fee structure to determine the sanction amount you pay under a closing agreement. 

The IRS will review your documentation and determine if we agree with your conclusions and that you appropriately self-corrected any mistakes. We’ll then issue a closing letter or conduct either a limited or full scope examination.”

If you have any questions, I invite you to reach out to me and the team at Rainer & Company at mdehaven@rainer.com or 610-353-4610.