Compensation and Benefits
CLIENT E-ALERT
May 2010
Important 401(k) News
This month, the IRS is sending a compliance checklist to 1,200 employers with 401(k) plans. If you receive one, you will also receive a PIN and be required to enter online answers to questions about your 401(k) plan and its operations.
This is a serious process, meant to teach the IRS more about 401(k) plans and to make its audit process more effective.
IRS writes that the survey will focus on:
- Demographics
- 401(k) plan participation
- Employer and employee contributions
- Top heavy and nondiscrimination rules
- Distributions and plan loans
- Other plan operations
- Automatic contribution arrangements
- Designated Roth features
- IRS voluntary compliance programs
- Plan administration
Are you in trouble? No. Unless you fail to answer.
IRS warns that a failure to respond may trigger a formal audit of your 401(k) plan, so complete the online survey if you are contacted. A cautious employer will probably want to sign on with the benefits professional who is most familiar with its plan.
More information is at this IRS link.
CONTACT
If you have any questions about this alert, please email the author, George L. Chimento.
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This article is provided as a courtesy and may not be relied upon as legal advice, or to avoid taxes and penalties. Distribution to promote, market, or recommend any arrangement or investment to avoid or evade taxes, including penalties, is expressly forbidden. Any communication with the author as to its contents, does not, of itself, create a lawyer-client relationship. Under the ethical rules applicable to lawyers in some jurisdictions, this may be considered advertising.
IRS Circular 230 Notice: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding U.S. tax penalties.