PLANSPONSOR - June - July 2022 - 4

RULES & REGULATIONS
The IRS' New Corrections Program
I
n early June, the IRS announced a preaudit
compliance program for retirement
plans, under which the agency's
auditors will send a pre-audit letter to
sponsors whose plans have been selected
for upcoming review.
Upon receiving a letter, the sponsor
has 90 days to identify and correct any
compliance issues with its plan and to
notify the IRS of the corrective actions
taken. Attorneys who have reviewed the
pre-audit program say it presents sponsors
with an opportunity to self-correct
issues in advance of their plan's review.
According to commentary written by
Peter Daines and R. Sterling Perkinson,
attorneys with Kilpatrick Townsend, " The
IRS' announcement indicates that, if a
sponsor does not respond to the pre-audit
letter within 90 days, [the agency] will
move forward with scheduling an audit.
But if a sponsor responds to the pre-audit
4 PLANSPONSOR.COM June - July 2022
letter, the IRS will assess whether to issue
a closing letter or to conduct a limited or
full scope audit. "
As Daines and Perkinson pointed out,
the IRS has not provided guidelines as to
how it will make this assessment, but it
appears to the attorneys that sponsors will
have some ability to avoid or limit a potential
audit if they respond to the preliminary
letter " in a way that demonstrates a
commitment to voluntary compliance. "
" The IRS will assess sanctions for
any compliance failures corrected under
the pilot program (other than failures
eligible for self-correction) based on the
user fees for its Voluntary Correction
Program, which has a maximum user fee
of $3,500, " Daines and Perkinson noted,
adding, " VCP is not available to sponsors
once they have received verbal or written
notification of a pending audit. "
Ordinarily, the attorneys pointed
Art by Allie Sullberg
out, compliance issues discovered under
audit, other than " insignificant " operational
failures, are subject to sanctions
under the IRS' Audit Cap Program. The
level of such sanctions will depend on the
agency's assessment of the " nature, extent
and severity of the failure. " According to
the Kilpatrick Townsend attorneys, in any
case, these sanctions tend to be significantly
higher than VCP user fees.
" As a result, plan sponsors that receive
a pre-audit letter should begin the process
of assessing any compliance failures,
taking any appropriate corrective actions
and preparing a summary of any compliance
issues for the IRS, " they concluded.
" This is a welcome departure from
the longtime voluntary correction principle
that allowed voluntary correction only
until the IRS had identified the plan for
audit, " says Dannae Delano, a partner in
the Wagner Law Group. -John Manganaro

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PLANSPONSOR - June - July 2022

Table of Contents for the Digital Edition of PLANSPONSOR - June - July 2022

INSIGHTS
RULES & REGULATIONS
UPFRONT
2022 Plan Sponsor of the Year Winners
By Extension
Talent Management
The Best Line of Defense
Under-the-Radar Plan Errors
FIDUCIARY FORUM
INSIDE ANGLE
PLANSPONSOR - June - July 2022 - Cover1
PLANSPONSOR - June - July 2022 - Cover2
PLANSPONSOR - June - July 2022 - 1
PLANSPONSOR - June - July 2022 - INSIGHTS
PLANSPONSOR - June - July 2022 - 3
PLANSPONSOR - June - July 2022 - RULES & REGULATIONS
PLANSPONSOR - June - July 2022 - 5
PLANSPONSOR - June - July 2022 - 6
PLANSPONSOR - June - July 2022 - 7
PLANSPONSOR - June - July 2022 - UPFRONT
PLANSPONSOR - June - July 2022 - 9
PLANSPONSOR - June - July 2022 - 10
PLANSPONSOR - June - July 2022 - 11
PLANSPONSOR - June - July 2022 - 12
PLANSPONSOR - June - July 2022 - 13
PLANSPONSOR - June - July 2022 - 2022 Plan Sponsor of the Year Winners
PLANSPONSOR - June - July 2022 - 15
PLANSPONSOR - June - July 2022 - 16
PLANSPONSOR - June - July 2022 - 17
PLANSPONSOR - June - July 2022 - 18
PLANSPONSOR - June - July 2022 - 19
PLANSPONSOR - June - July 2022 - 20
PLANSPONSOR - June - July 2022 - 21
PLANSPONSOR - June - July 2022 - 22
PLANSPONSOR - June - July 2022 - 23
PLANSPONSOR - June - July 2022 - 24
PLANSPONSOR - June - July 2022 - 25
PLANSPONSOR - June - July 2022 - 26
PLANSPONSOR - June - July 2022 - 27
PLANSPONSOR - June - July 2022 - By Extension
PLANSPONSOR - June - July 2022 - 29
PLANSPONSOR - June - July 2022 - 30
PLANSPONSOR - June - July 2022 - 31
PLANSPONSOR - June - July 2022 - Talent Management
PLANSPONSOR - June - July 2022 - 33
PLANSPONSOR - June - July 2022 - The Best Line of Defense
PLANSPONSOR - June - July 2022 - 35
PLANSPONSOR - June - July 2022 - Under-the-Radar Plan Errors
PLANSPONSOR - June - July 2022 - 37
PLANSPONSOR - June - July 2022 - FIDUCIARY FORUM
PLANSPONSOR - June - July 2022 - 39
PLANSPONSOR - June - July 2022 - INSIDE ANGLE
PLANSPONSOR - June - July 2022 - Cover3
PLANSPONSOR - June - July 2022 - Cover4
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https://www.plansponsordigital.com/plansponsor/august_september_2021
https://www.plansponsordigital.com/plansponsor/june_july_2021
https://www.plansponsordigital.com/plansponsor/april-may_2021
https://www.plansponsordigital.com/plansponsor/february-march_2021
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https://www.plansponsordigital.com/plansponsor/april-may_2019
https://www.plansponsordigital.com/plansponsor/february-march_2019
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