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IRS Stepping Up Pension Audits

March 5, 2004
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Large employers "should brace themselves" for possible IRS audits of pension plans, according to Business Insurance.

The U.S. government has made permanent a pension-auditing program that before was a limited pilot program. Six IRS audit teams--spread out in different parts of the country--will each examine 15 pension plans annually. Their focus will be on plans with 2,500 or more participants.

The IRS wants to make sure pension distributions are correctly calculated. It’s also looking at a long list of other items, including whether spousal consents are properly documented and if tax deductions correspond to what was contributed.

PricewaterhouseCoopers is telling employers to "beat the IRS to the punch" by making sure their plans comply with the law. Oftentimes a company’s plan literature is written in a way that’s consistent with the law but the plan’s operations do not conform to the well-written documents, an Aon consultant told Business Insurance.

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