The IRS Employee Plans function is piloting a pre-examination retirement plan compliance program beginning in June 2022. This program will notify a plan sponsor by letter that their retirement plan was selected for an upcoming examination. The letter allows a plan sponsor a 90-day window to review their plan’s document and operations to determine if they meet current tax law requirements. If the plan sponsor does not respond within 90 days, the IRS will contact them to schedule an exam.

Further, if the sponsor’s review reveals mistakes in the plan’s documents or operations, they may be able to self-correct those mistakes using the correction principles in the IRS’ voluntary compliance program (EPCRS), described in Rev. Proc. 2021-30. Additionally, if the sponsor finds mistakes during their review that aren’t eligible to be self-corrected, they can request a closing agreement.

The IRS will review the sponsor’s documentation and determine if the agency agrees with the sponsor’s conclusions. Further, the IRS will then issue a closing letter or conduct either a limited or full scope examination. Through this program, the IRS aims to reduce taxpayer burden and reduce the amount of time spent on retirement plan examinations. Finally, at the end of this pilot, the IRS will evaluate its effectiveness and determine if it should be a part of the IRS’ overall compliance strategy.