When is a Plan "Under Examination?"

For purposes of certain corrections under the IRS’s Employee Plans Compliance Resolution Program (See: Rev. Proc. 2018-52), the plan sponsor must not be “under examination” by the Internal Revenue Service. For this purpose, the term has the following specific definition -either:

(a) the Plan is under an Employee Plans examination (that is, an examination of a

Form5500 series or other Employee Plans examination);

(b) the Plan Sponsor is under an Exempt Organizations examination (that is,an examination of a Form990 series or other Exempt Organizations examination); or

(c) the Plan is under investigation by the Criminal Investigation Division of the IRS.


A plan that is under an Employee Plans examination includes any plan for which the Plan Sponsor,or an authorized representative, has received verbal or written notification from Employee Plans of an impending Employee Plans examination,or of an impending referral for an Employee Plans examination,and also includes any plan that has been under an Employee Plans examination and is in Appeals or in litigation for issues raised in an Employee Plans examination.


A plan is considered to be Under Examination if it is aggregated for purposes of satisfying the nondiscrimination requirements of Code § 401(a)(4), the minimum participation requirements of Code §401(a)(26),the minimum coverage requirements of Code §410(b),or the requirements of Code § 403(b)(12)(A)(i), with any plan that is Under Examination. In addition, a plan is considered to be Under Examination with respect to a failure of a qualification requirement (other than those described in the preceding sentence) if the plan is aggregated with another plan for purposes of satisfying that qualification requirement (for example, Code § 401(a)(30), 415, or 416) and that other plan is Under Examination.


An Employee Plans examination also includes a case in which a Plan Sponsor has submitted any request for a determination letter(even if it has been withdrawn) and the Employee Plans agent notifies the Plan Sponsor, or an authorized representative, of possible failures, whether or not the Plan Sponsor is officially notified of an"examination."The filing of a determination letter application does not constitute a voluntary identification of a failure to the IRS.


A Plan Sponsor that is under an Exempt Organizations examination includes any Plan Sponsor that has received (or whose authorized representative has received) verbal or written notification from Exempt Organizations of an impending Exempt Organizations examination or of an impending referral for an Exempt Organizations examination and also includes any Plan Sponsor that has been under an Exempt Organizations examination and is now in Appeals or in litigation for issues raised in an Exempt Organizations examination.



© Boutwell Fay LLP 2019, All Rights Reserved.This handout is for information purposes only, and may constitute attorney advertising. It should not be construed as legal advice and does not create an attorney-client relationship. If you have questions or would like our advice with respect to any of this information, please contact us.The information contained in this article is effective as of March 29, 2019.



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