It’s not unusual for the IRS to conduct audits of qualified employee benefit plans, including 401(k)s. Retirement plan sponsors are expected to stay in compliance with numerous, frequently changing federal laws and regulations.
- Have you identified all employees eligible for your 401(k) plan and given them the opportunity to make deferral elections?
- Are employee contributions limited to the amounts allowed under tax law for the calendar year?
- Does your 401(k) plan pass nondiscrimination tests?
- Traditional 401(k) plans must be regularly tested to ensure that the contributions don’t discriminate in favor of highly compensated employees.
If the IRS uncovers compliance errors and the plan sponsor doesn’t fix them, the retirement plan could be disqualified.