The IRS's Pre-Examination Pilot Program Enters Phase Two

The IRS announced earlier this month that it is extending its pilot program under which retirement plan sponsors are given 90 days' notice that their plan has been selected for examination, with the opportunity to avoid a full audit by correcting certain errors and demonstrating compliance with the applicable Internal Revenue Code rules by the end of the 90-day pre-examination period. We covered phase one of the pilot program in detail here.

The key features of the pre-examination pilot program remain the same. Under the pilot program, the IRS will notify plan sponsors by letter that their retirement plans have been selected for examination. This letter is sent 90 days before an IRS examination would otherwise begin, and triggers a 90-day period during which plan sponsors may review their plan document and operations to assess compliance with current tax law requirements. If the sponsor does not respond to the letter, the IRS will contact the sponsor to schedule an