Under Pre-Examination Pilot Program, IRS Will Provide Retirement Plans With 90 Day Self-Correction Period Before Scheduling Plan Audit | Practical Law

Under Pre-Examination Pilot Program, IRS Will Provide Retirement Plans With 90 Day Self-Correction Period Before Scheduling Plan Audit | Practical Law

The Internal Revenue Service (IRS) announced that it will launch a pre-examination compliance pilot program for retirement plans in June 2022 that will provide plan sponsors with an advance notice period of 90 days to review the plan's document and operations before the IRS schedules a plan audit.

Under Pre-Examination Pilot Program, IRS Will Provide Retirement Plans With 90 Day Self-Correction Period Before Scheduling Plan Audit

by Practical Law Employee Benefits & Executive Compensation
Published on 07 Jun 2022USA (National/Federal)
The Internal Revenue Service (IRS) announced that it will launch a pre-examination compliance pilot program for retirement plans in June 2022 that will provide plan sponsors with an advance notice period of 90 days to review the plan's document and operations before the IRS schedules a plan audit.
On June 3, 2022, the IRS announced that it will launch a pre-examination compliance pilot program for retirement plans in June 2022.
Under the pilot program, the IRS will notify a plan sponsor by letter, which will provide a 90-day review period during which the plan sponsor can review the plan's document and operations to determine if they meet current law requirements.
If the plan sponsor's review during the 90-day period reveals mistakes in the plan's documents or operations, the sponsor:
The IRS will then review the plan's documentation and determine if it is in agreement with the plan and that the plan appropriately self-corrected any mistakes. Based on its review, the IRS will issue a closing letter or conduct either a limited or full scope examination.
If the plan sponsor does not respond to the IRS within the 90-day period initiated by the letter, the IRS will contact the sponsor to schedule a plan examination.

Practical Implications

The IRS is piloting this pre-examination retirement plan compliance program to reduce taxpayer burdens and the amount of time spent on retirement plan examinations. The IRS will evaluate the program at the end of the pilot period and determine if it should continue.