Changes to Retirement Plan Audits

Recent rules changes have refocused the IRS on what they are calling a “focused examination.”  In a “focused examination” the IRS will look at the employers “internal processed and controls regarding pre-determined areas of compliance” such as investment policy statement, investment committee, eligibility, vesting and distributions.”  If they find no problems in those areas they will move on to another employer.

While this is good news for employers that maintain tight controls, it should not cause you to relax about the potential for an audit (either random, or based on employee complaint).  It is reported that a full audit and examination can involve between 75 and 150 requests for information, consumer 200-300 staff days, and yields significant dollars in corrections, fines and penalties.