TIGTA Said IRS's Employee Plans Function Greatly Improved Process For Selecting Retirement Plans For Examination

IRS's Employee Plans function has greatly improved its process for selecting retirement plans for examination, the Treasury Inspector General for Tax Administration (TIGTA) said in a recent audit. (Audit Report No. 2011-10-050) As described in the audit, the primary objective of Employee Plans function examinations is to determine if retirement plans are operating in accordance with the tax-exempt qualification provisions of the Code and within the terms of the plan document. If a retirement plan is not in compliance, IRS will work with plan officials to resolve examination issues and bring the plan back into compliance. TIGTA found that the agency's examinations are now identifying a larger percentage of retirement plans that are noncompliant. This improvement is credited to new methods for selecting examination cases that allow for emerging issues to be considered, while taking into account the risk of noncompliance for the retirement plan universe. For example, the most productive examinations have been the result of special projects, abusive transactions, and referrals. “Identifying noncompliance through the examination program ensures that Employee Plans function resources are being used wisely, and reduces the burden on plan sponsors and administrators by focusing on retirement plans most likely to have compliance issues,” TIGTA said. The audit can be found at http://www.treasury.gov/tigta/auditreports/2011reports/201110050fr.pdf.