IRS Mails 401(k) Compliance Questionnaire to Employers Sponsoring 401(k) Plans

Posted June 10, 2010

IRS warns employers that failure to respond or provide complete information will result in further action.

On May 18, 2010 the IRS' Employee Plans Compliance Unit (EPCU) began sending out a compliance questionnaire to 1,200 randomly selected 401(k) plan sponsors. The EPCU launched this initiative in an effort to ensure that these popular retirement plans are being operated properly. The agency will use the information gathered to gauge plan compliance and to gain insight into how to address non-compliance trends.

Plan sponsors will have 90 days to complete and return the "voluntary" questionnaire.

According to the IRS, the 401(k) Compliance Check Questionnaire Project is neither an audit nor an investigation — but it is an "enforcement action." While participation is not mandatory, failure to accurately complete and return the questionnaire within the three-month window could trigger a plan audit. The questionnaire is quite detailed and technical. Responding with wrong answers also could result in a plan audit.

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