IRS Launches A 90-Day Pilot Program To Correct Retirement Plan Errors

The Internal Revenue Service (IRS) has recently announced a 90-day pre-audit window to correct retirement plan errors. The program will allow for plan sponsors to be notified that the IRS has selected them for an upcoming examination and to allow them to correct errors they may have made.

The 90-day window will allow plan sponsors to fix errors, so they do not have to pay a penalty fee or pay a lower fee for voluntarily correcting any errors. If the plan sponsor doesn’t respond, the IRS will commence with an examination.

If a business makes changes and the documents support those changes, the IRS will issue a closing letter ending the investigation. The IRS could conduct a limited or full-scope examination if they still have reason to believe there are issues. Some mistakes are not eligible to be self-corrected, but a closing agreement can be requested. The Voluntary Correction Program fee structure will be used to determine the amount a business will pay under an agreement.

Before this program, the ability to fix errors prior to an IRS judgment was typically not available. Errors found by the IRS resulted in much higher fees and were less predictable than they are under this new pilot program.

The IRS states that the “goal with this program is to reduce taxpayer burden and reduce the amount of time spent on retirement plan examinations.” Once the pilot is over, the IRS will determine if it should become a new policy as part of its overall compliance strategy.

How GMS Can Help

While this policy helps businesses by giving them a window to correct errors, a professional employer organization (PEO), like GMS, can help eliminate these errors in the first place. That way, you don’t have to spend more money working with attorneys and advisors to conduct the self-audit after receiving a notification. Not only will it save you money to partner with GMS, but it will also save you valuable time that you can focus on operating the key facets of your business. Contact GMS today.