IRS 401(k) Plan Questionnaire: Non-Responders Will Be Subject to Full-Scope Audit

Internal Revenue ServiceAs reported in a previous Fiduciary Commentary, in May 2010, the IRS delivered questionnaires to some 1,200 401(k) plan sponsors to determine the general level of compliance of 401(k) plans. The questionnaire required the plan sponsors to provide information on the plan’s demographics, participation, contributions, top-heavy and nondiscrimination compliance, distributions and plan loans, and other plan information.

In the February 23, 2011 issue of the Retirement News for Employers, the IRS announced that the data-gathering phase was complete and that they will be evaluating the feedback provided by the respondents. The IRS intends to furnish a report that will highlight the areas where additional education is needed in its enforcement efforts. The IRS also announced that it will be carrying out a full-scope examination of those plan sponsors who did not give their response to the questionnaire., The IRS encourages all plan sponsors to use the 401(k) Questionnaire as an internal control tool to review plan compliance.

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