IRS Posts Guidance on Abusive Plan Transactions

February 12, 2004 ( -The Internal Revenue Service (IRS) has added a new section to its Web site to warn plan sponsors and advisors about the consequences of participating in abusive tax schemes involving employee retirement plans.

The site also provides recently issued guidance intended to shut down transactions the IRS deems abusive and a list of prohibited transactions. The new section also provides contact information for reporting suspected abusive transactions to the IRS.

As an example, IRS officials recently identified a scheme involving indirect contributions to Roth individual retirement accounts and one involving employee stock ownership plans for Subchapter S corporations, according to an IRS announcement.

“Employees and retirees count on the reliability of employee plans, which are overseen by IRS,” said IRS Commissioner Mark Everson, in a statement. “We’re providing this information so law-abiding plan professionals and participants can avoid being duped by promoters of abusive schemes that endanger the integrity of employee retirement plans.”

The new section on abusive transactions associated with employee plans can be found at,,id=118821,00.html .