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Guest Article

(From the June 16, 2008 issue of Deloitte's Washington Bulletin, a periodic update of legal and regulatory developments relating to Employee Benefits.)

IRS Provides Tools to Assist Employers in Plan Audits

In the Spring 2008 edition of its e-newsletter, Retirement News for Employers, IRS outlines the steps an employer should take if it receives a letter or phone call from IRS notifying it of a plan audit. The article, by Monika Templeman, Director of EP Examinations, highlights a number of examination related tools for employers available on the IRS’s website (www.irs.gov/ep). These tools include the “Top Ten Tips to Prepare for an Efficient Audit,” which is reproduced at the end of this article.

The initial contact letter from IRS will include a list of items the agent will examine. IRS indicates that the requested items should be available and organized for the agent’s visit, which will generally take place at the location where the original documents are maintained. In addition to the “Top Ten Tips,” other tools available on the IRS’s website to assist employers include:

EP Examination Process Guide and Flowchart which explain the process, and Audit Efficiency Guide which outlines how both sides are expected to work with each other.

Top Ten Tips to Prepare for an Efficient Audit

Below are tips to assist you in preparing for an examination of the return for your plan and trust. Underlined text embedded in each one of the ten tips below will link you to detailed information on that tip.

Have readily available Plan documents, including amendments, summary plan descriptions, etc. (include all prior versions requested) Opinion letters/determination letters Requested records efficiently organized Agreements with service providers Have appropriate people available (e.g., trustee, representative with power of attorney, record keeper, actuary, employer personnel) Be prepared to explain terms of the plan Be prepared to explain operation of the plan Administrative forms (e.g., salary deferrals, payment elections, spousal consents) Loan and hardship documentation Be prepared to provide all applicable test results (e.g., coverage, ADP/ACP, discrimination, top-heavy) Be prepared to explain internal administrative processes Practices and procedures Internal controls Be prepared to identify plan errors Resolved through self-corrections and the Voluntary Correction Program (VCP) Proof of corrections (see Correcting Plan Errors) Unresolved errors and suggestions to correct Be prepared to provide information about related employers/entities Controlled groups Affiliated service groups QSLOB (Qualified Separate Lines of Business) Consider utilizing annual self-audit as a verification tool (see Compliance Monitoring Procedures) Consider utilizing available IRS resources Website – www.irs.gov/ep Retirement News for Employers Employee Plans News

The information in this Washington Bulletin is general in nature only and not intended to provide advice or guidance for specific situations. If you have any questions or need additional information about articles appearing in this or previous versions of Washington Bulletin, please contact: Robert Davis 202.879.3094, Elizabeth Drigotas 202.879.4985, Mary Jones 202.378.5067, Stephen LaGarde 202.879-5608, Erinn Madden 202.572.7677, Bart Massey 202.220.2104, Mark Neilio 202.378.5046, Martha Priddy Patterson 202.879.5634, Tom Pevarnik 202.879.5314, Sandra Rolitsky 202.220.2025, Tom Veal 312.946.2595, Deborah Walker 202.879.4955. Copyright 2008, Deloitte.

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