IRS to Conduct Compliance Reviews of 457(b) Plans

Tags: ECPU compliance review | IRS

The IRS Employee Plans Compliance Unit (ECPU) is conducting a compliance review of nonqualified deferred compensation plans commonly known as “top hat” plans established under Internal Revenue Code Section 457(b).  The ECPU is looking for possible compliance irregularities related to funding, loans, catch-up contributions and plan sponsor eligibility.  If you receive an ECPU compliance letter request for information, you should timely provide any material or documents which might be helpful for clarification to the IRS.  The IRS indicated that it will not be inspecting books and records for any tax liability.  If the IRS determines that a plan has not been established or operated in accordance with Section 457(b), it will inform the plan sponsor if a plan audit or correction submission under the Voluntary Correction Program is needed.  If an employer does not offer a Section 457(b) plan and receives such a letter, it should contact the IRS to explain that the letter was sent by mistake.

If you would like additional information, or to have Blitman & King LLP assist in connection with an ECPU compliance review, please contact us.