Oversight of Governmental Plans

[mctoe]

What agency has oversight over Governmental DC plans?  Are Governmental DC plans ever audited?  If yes, by who?  

[Carol V. Calhoun]

The IRS has authority to audit the compliance of governmental 401(a) or 403(b) plans with Internal Revenue Code requirements.

[Peter Gulia]

And if you seek information about law and enforcement beyond tax law, the second-best source (if you don't engage Carol Calhoun) is chapters 7-9 in her Governmental Plans Answer Book.

[mctoe]

Thank you Peter.  I am a little embarrassed now that I asked this question.  Guess what was in my bookcase?  Yes, the Governmental Plans Answer Book!  Going through Chapters 7-9 now, thank you.

[Susan L.]

But your second question needs an answer!  "Are Governmental DC".. (or DB for that matter) ... "ever audited?"  I'll add to that and ask:  Has an enforcement action by the IRS as a result of an audit of a governmental plan ever been challenged in court and maybe a judicial decision rendered?

[Carol V. Calhoun]

1 hour ago, Susan L. said:

But your second question needs an answer!  "Are Governmental DC".. (or DB for that matter) ... "ever audited?"  I'll add to that and ask:  Has an enforcement action by the IRS as a result of an audit of a governmental plan ever been challenged in court and maybe a judicial decision rendered?

Yes, we have seen governmental plans audited. The motivation to challenge IRS actions is limited by the fact that the IRS is generally willing to accept a settlement that is far less costly than disqualification (and any applicable excise taxes). 

[mctoe]

With the work I do with gov't DB & DC plans it appears to me that these plans have no fear of being subject to a "real" audit.  Also from my experience, the people (plan sponsor/administrator) overseeing these plans know full well they are not in compliance with various IRS regulations but don't seem to care because they are not going to get caught.  Just my two cents.  

[Carol V. Calhoun]

2 hours ago, mctoe said:

With the work I do with gov't DB & DC plans it appears to me that these plans have no fear of being subject to a "real" audit.  Also from my experience, the people (plan sponsor/administrator) overseeing these plans know full well they are not in compliance with various IRS regulations but don't seem to care because they are not going to get caught.  Just my two cents.  

For a long time, that was true.  Unless a governmental plan committed such egregious violations that they turned up on the front page of the newspaper, they didn't get audited.  But we're involved in one at the moment, in which the IRS is alleging violations of minimum distribution requirements.

[Luke Bailey]

Would agree with all of above. In my experience, doctors generally stand by other doctors, TPAs by other TPAs, lawyers by lawyers, government workers.... Well, you get the idea. But as with TPAS, doctors, etc., there are limits.