Compliance May 21, 2010

IRS Provides 401(k) Compliance Check Details

The Internal Revenue Service (IRS) said a random sample of 1,200 401(k) plan sponsors will be notified this week that they have been selected to fill out an online compliance check questionnaire.
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An IRS news release about the initiative, announced earlier this year (see “IRS to Mail 401(k) Compliance Questionnaires“), said results of the Web poll would help the tax agency better target its oversight efforts over the retirement savings plans.

“The information gathered from the Questionnaire will provide a comprehensive view of 401(k) plans and will help (the IRS) maximize its resources for education, outreach, guidance and enforcement efforts while minimizing the burden to compliant plan sponsors,” the IRS said in the announcement.

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Coordinated by the IRS Employee Plans Compliance Unit (EPCU), the survey seeks plan information on:

  •  Demographics 
  •  Participation 
  •  Employer and employee contributions 
  •  Top-heavy and nondiscrimination testing 
  •  Distributions and plan loans 
  •  Other plan operations 
  •  Automatic contribution arrangements 
  •  Designated Roth features 
  •  IRS voluntary compliance and correction programs 
  •  Plan administration 

The tax agency said sponsors will only be asked to supply information specifically pertaining to their plan’s features; sections of the online survey document not applicable to the plan should not appear as the sponsor completes the requested answers. Each sponsor will also receive a paper copy of the survey with instructions to help formulate the plan’s online responses, the IRS said.

While noting that the effort was not a formal IRS audit, the agency said failure to respond or provide complete information will result in further action or examination of the plan.

Filing Out the Survey

Other instructions offered by the IRS include that sponsors should:

  • Answer the questions for the specific plan referenced in the cover letter, not including controlled group or affiliated service group members.
  • Unless otherwise indicated, provide responses as of the end of this Plan’s 2008 plan year.
  • Provide the most complete and accurate answers possible. Be sure to limit responses to the information requested and do not send books or records.
  • When completing questions which ask for dollar amounts or percentages, round the amounts to the nearest dollar or percentage unless otherwise instructed.
  • Click on “Save and Continue” to save responses for a particular page.
  • When returning to the Questionnaire to continue responding, navigate to the page where answers were most recently provided  by clicking “Save and Continue.” 
  • In some cases, a particular response to a question will cause follow-up questions to appear. These follow-up questions must also be answered before proceeding to the next page.

More Details

General information about the survey, including a list of frequently asked questions and a glossary, is available here.

A copy of the survey is here and instructions on how to complete the survey are here.

Questions about the survey should be addressed to EPCU@irs.gov with "401(k) Plan Questionnaire" in the subject line.

 

Compliance May 21, 2010

House Bill Carries DC Disclosure Requirements

A bill that has been introduced in the U.S. House of Representatives would impose new disclosure requirements on defined contribution plans.
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The American Jobs and Closing Tax Loopholes Act (H.R. 4213) is expected to be considered by the House on May 25, according to the American Benefits Council (ABC).

“We appreciate the efforts of Representatives George Miller (D-California) and Richard Neal (D-Massachusetts), who worked with us to ensure the transparency and security of workplace savings plans,” said James A. Klein, president of ABC. “We remain concerned, however, that the effective date for adoption of these new rules is unworkable given the need for extensive regulatory guidance, as these new rules will require substantial changes to existing systems and procedures. We intend to work with the U.S. Department of Labor to obtain a ‘good faith’ standard for compliance with the new rules.”

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Pension Relief

According to Klein, the bill also includes long-awaited pension funding relief measures such as provisions allowing single-employer and multiemployer pension plans an extended amortization of losses suffered in the recent market decline.

“The unprecedented ‘perfect storm’ of depressed financial markets, low interest rates and new pension funding rules has artificially inflated companies’ defined benefit pension obligations,” Klein said, in a statement. “Millions of dollars, normally earmarked for job creation and capital investment, are now being diverted into already healthy pension funds. This relief will help companies invest in jobs and infrastructure.”

More information about the bill can be found on the Web site of the House Committee on Ways & Means here.

 

 

 

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