The IRS has recently updated its Compliance Program and Priorities for retirement plans. They have identified several areas that will be focused on in 2021 by their agents. These include:

  • General Compliance – There will be a focus on determining if plan investments are properly administered and whether there are any party-in-interest transactions in the plan trust.
  • One Participant 401(k) Plan – The IRS will be looking to see if there are operational or qualification failures or plan document violations.
  • Self Employed Earned Income – They will examine if compensation has been computed correctly for those businesses that file a Schedule C.
  • Participant Loans – The IRS will be looking at plans that hold a large percentage of participant loans as a total of plan assets. They will be interested to see if loans are being repaid in a timely manner.
  • Unrelated Business Income – They will be looking at plans with self-directed brokerage accounts to see if there are partnership interests that may generate unrelated business income.
  • Partial Plan Termination/Partial Vesting – The IRS will be looking at those plans that had a large decrease in plan participants to see if proper vesting was applied in the case of a partial plan termination.

As always, we are working hard to keep your plan in compliance with all IRS laws and guidelines. Please ask your plan consultant if you have concerns about any of these areas.