May 19, 2010

401(k) Compliance Check Questionnaire Project

The Internal Revenue Service (the “IRS”) announced that its Employee Plans Compliance Unit (“EPCU”) has developed a 401(k) Compliance Check Questionnaire (the “Questionnaire”). During the week of May 17, 2010, EPCU will be sending a letter and instructions on how to complete the Questionnaire to a random sample of 1,200 401(k) plan sponsors that filed a 2007 Form 5500.

The Questionnaire asks questions about a 401(k) plan’s:

  • demographics
  • participation
  • employer and employee contributions
  • nondiscrimination rules
  • distributions
  • loans
  • operations
  • automatic contribution arrangement
  • Roth features
  • IRS voluntary compliance and correction programs
  • administration

According to the IRS, this project is designed to (1) determine potential compliance and operational issues and (2) gain a better understanding of the reasons for noncompliance. The IRS intends to ultimately publish a report summarizing the information that it gathers from the Questionnaire.

While receipt of a Questionnaire does not, by itself, trigger an audit or investigation, the IRS has stated that failure to complete the Questionnaire will result in further action or examination of a plan.

For more information on the 401(k) Questionnaire, contact your SGR Executive Compensation and Employee Benefits counsel.


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