IRS Readies 403(b) Audit Plans

ADMIN Partner’s Principal’s, Suzanne Jones and Mark Heisler spoke at the National Tax Sheltered Account Association (NTSAA) national conference in January. The conference featured numerous presentations on the state of the 403(b) market. A much anticipated presentation was made by Ed Salyers, a Senior IRS Employee Plans Audit Specialist. Ed’s presentation focused on the 403(b) Plan audit practices the IRS will unveil later this year (a separate communication piece is being developed on 403(b) Plan audit preparations). In the meantime, we need to share a number of important compliance notes from the session.

• 403(b) Plan audits will begin this year. (IRS auditors are being trained now).
• The IRS is preparing to send “pre-examination” letters to 403(b) eligible employers in 7 states shortly (he would not indicate which states). The letter will focus on employer “Universal Availability” practices.
• The IRS will publish final regulations this spring on a new 403(b) written plan document approval processes.

If these things are not enough, PlanSponsor.com reported in its February 9th issue that the IRS is also preparing to send 6,000 employers compliance research examination notices (a “3850-b examination). The primary areas of focus are expected to be:

• Worker classification (employee versus independent contractor)
• Fringe benefits
• Officer compensation
• Back-up withholding, and
• 1099 reporting

As you can tell the IRS is ready to make good on its promise that audits will begin in 2010. Keep your eye out for the audit practice piece. If you have any questions, feel free to call a member of the ADMIN Partners team at 877-484-4400.

Tags: 403b audit plans, ADMIN Partner's, Mark Heisler, NTSAA conference, Suzanne Baldino Jones, Suzanne Jones, third party 403 (b) administration