IRS audit requests for 401k plan and or profit sharing

[jeanh]

Has anyone started receiving audit request - I have had two of my clients audited in last 2 months

[Belgarath]

No. Hopefully it will stay that way!! What year(s) were audited, and how many participants, and with what results (if known)? Was there anything "unusual" about the plans that you know of?

[jeanh]

These were very small 1 man plans for 2022-2024- in Houston Tx 

The first one was a family business with 3 family members only , audit went thru with no issues

I am currently working on the 1 man plan - via zoom meeting and should be no issues

Neither plan had any red flags, all data requested I had available

Just curious, could the IRS possibly target my firm? 

[Belgarath]

I've actually wondered if due to staffing/funding cutbacks at the IRS, they will devote more audits to small, "easy" plans 'cause they don't have the resources to handle as many large plan audits. Just a random depressing thought that occurred to me...

[Lou S.]

Unlikely the IRS is targeting your firm specifically. Though you may be doing plans that the IRS are targeting at a higher rate in your area. You can always ask the auditor the reason for audit, they are usually pretty open about it in my experience.

I had a couple audits about 2-3 years ago and both were audits of the non-union plan but they also had union employees. And both auditors told me they were targeted over coverage issues as they were checking number of W-2s v number of eligible employees reported on 5500. Both closed without issue. And the biggest thing they were looking for was a record that the union employees were covered by a CBA plan and the non-union plans passed testing.

 

[jeanh]

I did ask the first agent why they were auditing a plan that required no discrimination testing, etc... (family business) he just kind of fumbled around with the standard, "could be many reasons" line, but did say they were trying to stay busy.

 

This next one is a one man plan ,with no contributions..... really a huge waste of time, and they are not even visiting my office or clients office - just a teams meeting

Just curious if any other areas are getting audits. I have not had a plan audit in over 10 years

[Bill Presson]

I got a couple requests but told the auditors I was really busy and maybe @jeanh could do a few. 😇😂

[Lauren0507]

We received two audit requests for profit sharing plans. Both auditors were probationary employees and were let go, so the IRS canceled.  These were pretty simple plans with no obvious issues, so I think they were targeted for training purposes.

[jeanh]

On 5/27/2025 at 10:32 PM, Bill Presson said:

I got a couple requests but told the auditors I was really busy and maybe @jeanh could do a few. 😇😂

🤣

[jeanh]

On 5/27/2025 at 10:32 PM, Bill Presson said:

I got a couple requests but told the auditors I was really busy and maybe @jeanh could do a few. 😇😂

thanks🤣

[Bill Presson]

12 minutes ago, jeanh said:

thanks🤣

You’re welcome! 😂😇