Retirement plans included in IRS Replace of Compliance Methods

The IRS Tax Exempt and Government Bureau (TE / GE) has updated its compliance program. This includes compliance strategy initiatives that affect some retirement plans.

In their FY2021 program letter, TE / GE Commissioner Tammy Ripperda and Deputy Commissioner Edward Killen write that their office’s plans include:

  • Supporting tax compliance in “the global high net worth arena, particularly for private foundations and related company retirement plans, such as: B. Employee Share Ownership Plans “;
  • Promote voluntary compliance through the use of improved techniques against civil and criminal fraud and by recommending criminal prosecutions and / or civil sanctions or orders against tax evasion; and
  • Develop additional online tools and resources, e.g. B. An online interactive tax assistance tool to avoid undue contributions to 401 (k) plans.

The TE / GE states that its compliance strategy for 2021 includes:

  • Small exempt organizations that sponsor retirement plans. The TE / GE plans to review the retirement plans of small exempted organizations to determine that (1) the plan investments are being properly managed, (2) there are interested party transactions in the Plan Trust, and (3) affiliate loans violate the Internal Revenue Code Section 72 (p).
  • 401 (k) plans for one participant. This strategy focuses on reviewing a participant’s 401 (k) plans to determine if there are any operational or qualification errors, income and excise tax adjustments, or planning document violations.
  • Required minimum payouts in large defined benefit plans. This strategy focuses on ensuring that retirement benefit sponsors comply with Internal Revenue Code Section 401 (a) (9) to begin distributing benefits by April 1 following the calendar year in which an employee is 70½ years old becomes.
  • Affiliate loan. The TE / GE intends with this strategy to ensure that subscriber loans comply with the rules of section 72 (p) for maximum loan balances and the rules for repayment of section 72

The TE / GE plans to audit the pursuit of these strategies.