IRS Will Penalize Employers About 401K Questionnaire
As an employer offering a retirement plan such as a 401k plan, did you receive a questionnaire from the IRS (Internal Revenue Service) in May 2010? You can’t miss it. The questionnaire is 46 pages and covers three years of data, 2006-2008.
1,200 companies were chosen at random by the IRS’s Employee Plans Compliance Unit (EPCU) for the survey on the 401k Compliance Check Questionnaire Project. The questionnaire can be filled out electronically to save you time.
If you received it and thought it was voluntary to participate in the survey, you would be wrong. The IRS recently announced that they will take actions to force the employer to complete the questionnaires including charging you penalties. So, take a deep breath, call the financial adviser who handles your 401k plan and sit down together to fill it out. A competent adviser should be able to help you finish the questionnaire in 15-20 minutes especially if the account documentation has been maintained properly. You don’t have to struggle alone on it.
The questionnaire covers questions on 401(k) plan participation, employer and employee contributions, distributions and plan loans, IRS voluntary compliance programs and plan administration. The survey answers will be compiled into an IRS report to help them figure out where additional education, guidance and outreach are needed.
This being the IRS, they also plan to use the results from the survey to identify how they can find companies not following 401(k) regulations.
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