IRS Releases Information About Compliance Projects

In two completed projects, the IRS found some 403(b) plans are making W-2 reporting errors, and some retirement plans were not properly vesting participants during a partial termination. The IRS is focusing on SIMPLE IRA plan eligibility.

By Rebecca Moore | October 14, 2016
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The Internal Revenue Service has released results of two completed Employee Plans Compliance Unit (EPCU) projects and announced a new project.

The EPCU Ineligible Employer-403(b) Plans Project was designed to educate Internal Revenue Code (IRC) Section 501(c)(3) organizations whose tax-exempt status had been automatically revoked pursuant to IRC Section 6033(j) to ensure an employer eligibility failure had not occurred in the sponsoring of an IRC Section 403(b) plan.

The Project goals were to:

  • Determine if the box 12 code on Forms W-2 was correctly reported;
  • Determine whether or not the organization sponsored an IRC Section 403(b) plan;
  • Verify the sponsor eligibility for an IRC Section 403(b) plan;
  • Advise the organization on corrective actions necessary with regards to their IRC Section 403(b) plan; and
  • Educate IRC Section 403(b) sponsors regarding a written plan document.

The EPCU sent contact letters to 67 entities from the Automatic Revocation of Exemption List that also filed a 2010 Form W-2 reporting employees with IRC Section 403(b) elective deferrals.

Responses showed that the majority of the plan sponsors were educational organizations still eligible to sponsor their IRC Section 403(b) plan. However, some employers incorrectly reported IRC Section 403(b) plan deferrals in box 12 showing that the accuracy of the box 12 codes, in addition to Form 990 filing, is still a concern.

More information is here

NEXT: Partial Termination/Partial Vesting Project