(b)lines Ask the Experts – Examination Letters

July 19, 2011 (PLANSPONSOR (b)lines) – “I recently received a letter from the IRS telling me that my 403(b) plan is under examination.  What should I do?”

David Levine, Groom Law Group, answers:  

Although each IRS examination should be handled based on the specific questions asked by the IRS, there are a number of key first steps.     

First, a decision needs to be made about who will respond to the IRS agent.  This person can be your in-house counsel, a human resources representative, an outside counsel, or another representative selected by your organization.   

Second, because the initial letter will often contain a document request, it may be necessary to notify your consultant, recordkeeper, and/or third party administrator that you will need them to assist you with certain plan documents and data (such as data on nondiscrimination testing).   

Third, because the initial letter will often have a response deadline, your organization, even if you are still getting organized to respond, should contact the agent to discuss whether you will be able to provide the requested documents by the response deadline, whether you believe that any of the documents are not necessary (and why), and whether an extension can be arranged.   

Lastly, you should note that many IRS examinations can be quickly resolved if you work with the IRS agent to address their specific concerns and active engagement with the IRS is key.  


NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.