IRS Pilots Pre-Examination Retirement Plan Compliance Program
Published June 06, 2022
The Internal Revenue Service (IRS) announced it has started the second phase of the Pre-Examination Retirement Plan Compliance Program pilot. During the first phase of this program, 100 pre-exam compliance letters were mailed to plan sponsors which resulted in a 72% response rate.
(Updated February 7, 2024)
The Internal Revenue Service (IRS) announced it is piloting a pre-examination retirement plan compliance program beginning in June 2022.
The program will notify a plan sponsor by letter that their retirement plan was selected for an upcoming examination. The letter gives a plan sponsor a 90-day window to review their plan’s documents and operations to determine if they meet current tax law requirements. If the plan sponsor doesn't respond within 90 days, IRS will contact them to schedule an exam.
If the review reveals mistakes in the plan’s documents or operations, a plan sponsor may be able to self-correct the errors using the correction principles in our voluntary compliance program (EPCRS), described in Revenue Procedure 2021-30.
If mistakes are found during the review that aren’t eligible to be self-corrected, a plan sponsor can request a closing agreement. IRS will use the Voluntary Correction Program fee structure to determine the sanction amount to be paid under a closing agreement.
IRS will review documentation and determine if they agree with a plan sponsor's conclusions and whether any mistakes were appropriately self-corrected. IRS will then issue a closing letter or conduct a limited or full-scope examination.
The program's goal is to reduce taxpayer burden and the amount of time spent on retirement plan examinations. At the end of the pilot, the IRS will evaluate its effectiveness and determine if it should continue to be part of its overall compliance strategy.