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The IRS is now offering extensive educational tools for Plan Sponsors and Employers on the IRS.gov website, including the three excerpted sections below. If you want to see the complete sections, click on the links provided.

FAQs regarding the EP Team Audit (EPTA) Program

What is EPTA?

Employee Plans Team Audit ("EPTA") is a broad-scope examination of an employee benefit plan(s) with 2,500 or more plan participants. The employee benefit plan is identified and selected for examination by the EPTA Case Selection Committee. The examination is conducted by a team comprised of the Case Manager, Team Coordinator and, as appropriate, additional team members, such as EP revenue agents, computer audit specialist, actuary, attorney, engineer, employment tax specialist, etc.

Retirement Tips for Employers

  • Watch for Common Mistakes - Avoid the following mistakes:
    1. not following the terms of the plan document;
    2. not covering the proper employees;
    3. not giving the employees required information;
    4. not depositing employee deferrals or employer contributions timely; and
    5. not limiting employee deferrals and employer contributions to the proper limits.

  • Perform Periodic Review of Your Plan - Errors in a plan brought on by changes in your work force and its salary deferral patterns are easier and cheaper to fix when they are small and have not been allowed to continue over a long period of time. Changes in your business may produce unexpected changes in your business operations.
  • Get an Independent Reviewer to Check Your Plan - An independent reviewer may see something that has been overlooked by others, which could save you and your employees money, and may improve benefits.
  • Correct Mistakes Now - The Service has helpful correction programs that are structured to provide financial incentives for finding and correcting mistakes earlier rather than later. In fact, many mistakes can be corrected easily, without penalty and without notifying the Service. (See Publication 4224.)

EP Connections: Interview With Michael Julianelle

How are plans selected for an EP examination? For example, what methods are used? Is statistical sampling used?

In EP Examinations we use the Returns Inventory & Classification System (RICS). In the past there has been an informal doctrine in using RICS that is called "LUQ" - that is, we scrutinize a return to determine if an item is Large, Unusual or Questionable. The key down the road is sampling variant analysis. In other words, what are the items that may lead to a mix of issues that lead to compliance problems? We will use these items to pick the returns with the highest potential for noncompliance and will let us identify the issues that are relevant to a particular market or customer segment. In the future, I would also like to see us select returns other than through RICS by including local knowledge and agent expertise in the selection process.

In some of our market segments statistical sampling is not appropriate. We have revised our statistical sampling by plan type (i.e., 401(k), Defined Benefit, Profit Sharing, Money Purchase). We want to do a fairly significant number of cases in each segment. We'll determine baseline criteria for our customer segments, measure our impact down the road, and develop alternative treatments and measure those treatments. Upon completion, we will publish our findings.

My goal is to move away from general audits to a more specialized approach. We have developed Information Document Requests (IDRs) by plan type and audit technique guidelines that identify what the issues are. We intend to share those internally and externally.

We are currently testing a focused examination initiative, where we would limit our audit to those issues that are relevant to a particular market segment and only expand the examination based on the examination of those key issues. Practitioner feedback indicates our current audit strategy is too burdensome and that we are auditing a significant number of irrelevant and extraneous items where there is no history of noncompliance. The focused exam approach will also allow us to examine more plans.

 
   
 

 
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©2011 Sunlin Consulting

Sunlin Consulting is a group of employee benefits specialists, with diverse and complementary skills, dedicated to helping companies navigate the constantly changing seas of retirement plan compliance guidelines. We work with: 3(21), 3(38), 401(k), 403(b), 404(a), 404(c), 404(a)5, 408(b)2, Employee Benefits, ERISA Compliance, Expense Monitoring, Fiduciary Liability Management, Investment Policy Statement, Investment Monitoring, Plan Compliance, Plan ERISA Compliance, Plan Expense Monitoring, Retirement Plan, and Retirement Plan Compliance. Partners include: Stuart Hack, Loong Kong, Murray McBride, and Stephanie Reagan.

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