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.

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.

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 with "401(k) Plan Questionnaire" in the subject line.