While the Internal Revenue Service (IRS) oversees federal tax laws associated with pension plans, the Employee Benefits Security Administration (EBSA) of the U.S. Department of Labor (DOL) is the federal agency that enforces pension plan regulations. Both employers and employees can find useful information on the EBSA website: https://www.dol.gov/agencies/ebsa In general, all qualified retirement plans must file a Form 5500 for every year containing the information about the contribution amount, the plan asset, the plan operation… The Form 5500 (except Form 5500 EZ) is filed with DOL annually. The Form 5500 EZ is filed with IRS annually.
Can my plan be audited by EBSA of DOL?
Yes, different from the IRS audit, the DOL audit is not random. It is usually triggered by certain factors, such as the employee’s complaint, the form 5500 questions, referrals from IRS or PBGC, National Enforcement Priorities/Projects…
Frankly speaking, the DOL usually conducts more extensive audits than the IRS. DOL investigations can lead to criminal indictments in addition to civil penalties.
Can I self-correct if an error is discovered?
Yes, it is always cheaper to correct errors before the audit. Self-correction (in certain cases) and voluntary correction program options are available, but only before the plan is subject to audit. Once the plan administrator is notified of an audit, the voluntary correction is no longer an option.
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