BENEFITS BYTE

June 2, 2004
BB 04—61

In this issue:

  • IRS Gears Up for Team Audits of Large Plans
  • REMINDER: Council User IDs, Passwords for Members-Only Web Site Documents

IRS Gears Up for Team Audits of Large Plans

The Internal Revenue Service (IRS) is preparing to perform team audits — comprehensive official reviews — of large qualified retirement plans and their operations. (Large qualified retirement plans are defined by the IRS for this purpose as plans covering more than 2,500 participants.) Council staff discussed the program with the Employee Plans Examination, Program & Review group at the IRS, which indicated the IRS has six groups of auditors — three in training and three that have conducted pilot audits.

The IRS indicated that, until now, it has not dedicated sufficient resources to large plan audits. They estimate that approximately 60 percent of qualified plan participants are covered by large plans. The IRS is drafting a list of anticipated audit issues that will be made available to the public within a few weeks and posted on an official Web site by the end of the IRS's fiscal year (September 30). The IRS official with whom the Council spoke said some likely areas of focus will be acquisitions, terminations, problems in certain industries and types of benefits being paid out of the trust.

The pilot audits have resulted in significant changes to the returns filed by 80 percent of the audited plans — a much higher percentage than other types of audits. The IRS anticipates as many as 90 of these in-depth team audits per year. Individual audit teams may consist of a group manager, a senior revenue agent and perhaps a second agent, a computer audit specialist, an attorney, an actuary and a determination letter specialist. Specialists will be pre-assigned depending on the expected issues.

The IRS characterized the large plan audit selection process as "unique", indicating there will be multiple steps in the selection process. Initial determinations will likely be made by area IRS managers and large group managers factors such as related entities, size of assets and contributions and types of plans. Final selection will be made by a committee that will attempt to select plans most likely to have issues. For more information, contact Jan Jacobson, Council director, retirement policy, at (202) 289-6700.

REMINDER: Council User IDs, Passwords for Members-Only Web Site Documents

As you know, some areas and documents on the American Benefits Council Web site are password-protected for members of the Council only. Remember, when you are prompted for a user ID and password, your user ID will be your e-mail address as it appears in our database (the same address to which the Benefits Bytes are e-mailed) and your password is the word "security.") Both your user ID and your password must be typed in lower-case letters. If you are having trouble with access, please contact Jason Hammersla, Council communications associate, at (202) 289-6700.

Also, remember that since Council memberships are corporate, there is no extra cost to add additional recipients from your company to the Benefits Byte distribution list or to receive access to the members-only documents on the Web site. For any additional individual from your company who would like to receive Benefits Bytes or gain access to the members-only documents, please fill out the top portion of this online form or send an e-mail to Jason Hammerslag with the following information:

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Thank you for your continued support.

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The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.