IRS and DOL Audits

RPG Consultants has a team of credentialed employees — including QKA, QPA and ERPA — that have demonstrated proficiency in representing clients with plan audits and have consistently achieved successful outcomes. We take ownership of the process, prepare the audit forms, and handle the communications with the auditor, leaving minimal responsibility to the employer.

At RPG, we close 95% of audit cases after the initial meeting with the IRS agent!

The Audit Process

Flowchart detailing the steps that follow during an audit process with RPG. First, the plan sponsor received a plan audit notification and contacts RPG. RPG takes ownership of the process and prepares a plan audit package. An appointment is scheduled with an IRS agent and an on-site audit of the plan is performed by that agent, with RPG representing the plan sponsor client. RPG closes 95% of cases after this initial on-site meeting; in that event, the case is closed!. If instead the IRS agent requests additional information, RPG ensures that information is presented to the agent, either by mail or at a subsequent visit. The IRS agent reviews the new information. If no further changes are required, the audit case is closed. If corrective action is required, then RPG guides the client to take corrective actions. Those actions might involve: tax changes; correction programs (Employee Plans Compliance Resolution System); Unagreed case / revocation (Proposed revocation or non-qualification letter issued). Once corrective actions have been taken, the audit case is closed.

What are plan audits for?

A plan audit conducted by the IRS ensures that plans follow regulatory compliance requirements to maintain their status as qualified retirement plans.

How are plans selected for audits?

Some plans are audited as a result of red flags from reviews of 5500 Forms. The majority of plans audited by the IRS or DOL each year are randomly selected.

Who can represent me in an audit?

An attorney, accountant, enrolled agent, enrolled actuary, or the person who prepared and signed the return.

What is reviewed in a plan audit?

Eligibility, participation, and coverage

Are eligible employees properly participating?

Vesting

Have service and vesting been properly credited?

Discrimination

Do contributions, benefits, rights or features favor highly compensated employees in a non-compliant manner?

Top heavy requirements

Have minimum contributions and benefits, and accelerated vesting, been provided?

Contribution and benefit limits

Are contributions and benefits within applicable limits?

Funding and deductions

Are contributions sufficient and timely, and deductions within applicable limits?

Distributions

Are distributions properly made and timely and accurately reported?

Trust activities

Is the trust operated for the exclusive benefit of participants and in accordance with fiduciary standards?

Plan and trust documents

Does the form of the plan and trust timely meet applicable tax law?

Returns and reports

Were federal returns and reports timely and accurately filed?

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An Annual 401(k) Audit is NOT an IRS/DOL Plan Audit

With the reporting deadline for employee benefit plans rapidly approaching, it is important to be familiar with the 401(k) audit compliance rules and to know the difference between an annual 401(k) audit performed by a CPA firm and an IRS or DOL 401(k) plan audit.

Financial Plan Audits

Apart from the IRS/DOL plan audits discussed above, there are annual financial statement audits that are required for some qualified retirement plans. These audits are generally performed by independent qualified public accounting firms. Certified auditors who perform financial audits should be familiar with ERISA, IRS and DOL regulations, as well as other requirements directly associated with employee benefit plans.

RPG Consultants coordinates with CPA firms and financial auditors to gather the data needed for the financial audit package.

Fiduciary and Auditing Video Series

Learn about the requirements for a financial audit, the importance of selecting a financial auditor and what you can do to make the audit process run smoothly.

Talk to RPG Consultants about Plan Audits