What to Expect When Your Plan is Audited

December 8, 2011 (PLANSPONSOR.com) – Having your retirement plan audited by the Internal Revenue Service or Department of Labor can be a stressful situation for everyone.   

During a live webcast, members of the team at Clifton Gunderson LLP explained what to expect and prepare for when receiving a plan audit notice. Following these easy tips, you can work to avoid an audit, but if you do have to go through the auditing process, it doesn’t need to be a stressful experience, especially if you are well prepared.

Michelle G. Murphy, QPA, QKA, ERPA, senior manager, employee benefit services, Clifton Gunderson LLP, provided a background on the reasons the IRS and DoL conduct audits.  

For 2011, the IRS’ audit priority areas include plans with abusive tax transactions, listed transactions substantially similar to tax avoidance transactions, Section 412(i) Excess Life Insurance deductions, S Corporation 409(p) violations, 401(k) accelerated deductions, collectively bargained welfare arrangements, abusive Roth IRA transactions, governmental plans community, international issues, plans that were part of the 401(k) Compliance Project and 403(b) plans.

Possible triggers for an audit with the DoL are complaints, rumors from newspaper reporting or general public information, responses on Form 5500, late salary deferral deposits, assets with value are not readily determinable, prohibited transactions, real estate held in a plan, employer property held in a plan, contributions of property to a plan, failure to provide blackout notice and failure to provide benefits when they are due.