SOL for IRS Audit on Gov Plan

[EBAtty 0]

I understand that filing Form 5500 begins the running of the statute of limitations for an ERISA Plan IRS audit. A governmental DB plan, however, is not subject to the Form 5500 filing requirement. Any leads on what starts the running of the SOL for a governmental DB plan?

[Carol V. Calhoun 31]

The statute of limitations is pretty much irrelevant for a governmental plan. Under News Release IR-1869, IRS will not attempt to tax trusts under governmental plans on their income, regardless of whether the plan is qualified. (The provisions of that News Release relating to nondiscrimination rules have been rendered obsolete by subsequent legislation, but the part relating to the taxability of the trust has not.) And of course, governmental employers are not worried about deductibility of contributions. So the issues are:

• Taxability of participants (both on vested contributions to the plan, and on receipt of distributions)
• Employment taxes of the employer

And for these issues, you'd look at the SOL that applies to the participant's return or to the employer's employment tax return.

[EBAtty 0]

Thank you so much, Carol. This is very helpful.