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Employee Plans News - October 8, 2010 - Critical Priorities…With Monika Templeman - Accomplishments…and What’s Next in Our Examinations Efforts

In each issue, Monika Templeman, Director of EP Examinations, responds to questions and offers insights on retirement plan topics uncovered during audits. You may provide feedback or suggest future topics for discussion by e-mailing her at:

Monika, in an earlier issue of this newsletter, you discussed what you hoped to achieve in this fiscal year. Please update us on what you and your employees have accomplished. Let’s start with EP’s international efforts.

We’re successfully focusing on international issues that impact retirement plans. We made major strides this year and we’re on track and ready to proceed in the years ahead. We’ve collaborated with Large Business and International (formerly Large and Mid-Size Business) and other functions in the IRS. We used our resources, such as our Employee Plans Team Audit (EPTA) and Employee Plans Compliance Unit (EPCU), to strengthen international tax compliance for pension plans. EPCU launched two compliance check projects involving international entities. EPTA currently has more than 20 large case examinations that have international issues. We want to discover where the plans’ trust records go and whether the exclusive use of these plans is to provide retirement benefits for plan participants.

As I mentioned in a prior article, we’re actively involved in the Hacienda Project with Puerto Rico. This project focuses on information reporting, referrals, joint pension plan audits and voluntary compliance. We coordinated a Memorandum of Understanding with the Virgin Islands to audit plans. We’ll help them with training and voluntary compliance efforts.

You mentioned the Hacienda Project, in which EP is working to enhance compliance in Puerto Rican retirement plans. How’s that progressing?

The Hacienda Project with Puerto Rico has been a big success. In March, EP began joint audits with 12 new Hacienda agents and we’ve reviewed approximately 50 Puerto Rican plans. We’re also working with the Hacienda, at their request, to establish a voluntary compliance program for retirement plans and other Puerto Rican tax issues.

What do you hope to accomplish in the international area in the next year or so?

EP will continue to develop capabilities to address key international issues impacting the Employee Plans sector. Collaborating with LB&I and other IRS divisions, our goal is to identify complex international transactions and recognize target areas of significant risk and potential abuse affecting retirement plans. We’ll complete ongoing EPCU International projects and post project updates at

Let’s move on to the 401(k) Questionnaire. What’s the latest on that project?

We’ll be analyzing data from the 401(k) Compliance Check Questionnaire Project . In May 2010, EPCU sent letters to a statistically valid sample of 1,200 401(k) plan sponsors and instructed them to complete the Questionnaire online by visiting a secure website using a PIN provided in the cover letter. We received most of the responses and are following up with non-responders. EPCU will work with our TE/GE Research team to analyze the data to gain a better understanding of 401(k) plans’ compliance behaviors.

Will you share the results of the project with the retirement plans community?

We plan to post our findings on EPCU’s Web page by June 30, 2011. The Questionnaire results will help us identify areas needing additional education, outreach, guidance and compliance activities.

Any tips for plan sponsors who did not receive the Questionnaire?

I highly recommend that all plan sponsors visit the EPCU page and print the Questionnaire and glossary of terms. I’d also suggest reading the FAQs. Plans sponsors should use the Questionnaire as a self-audit tool. It’s important to find plan mistakes early because the impact of non-compliance left unchecked can be very costly.

Large employers have internal resources to perform self-audits. Do you have any suggestions for small business owners who may not have these resources?

I appreciate the struggles that many small business owners face and applaud the ones who chose to establish retirement benefits for their employees. It’s important to maintain these plans so the benefits will be there at retirement. Small business owners should invest the time and money to ensure their plans are running properly. An employer who is not comfortable relying on the tools I mentioned earlier has the option of hiring a benefits professional.

Many small business owners assume that the financial institution that sold them their plan will also maintain the plan. Is this true?

Generally, that’s an incorrect assumption. It’s best for the employer to perform a self-audit, or hire a benefits professional to perform it.

Another priority was sharing information with the governmental plans community. How did you do this?

As with all of our specialized efforts, two-way communications with the governmental plans community will continue to be a priority. State and local governmental plans invest about $3 trillion in their retirement plans. We conducted speeches and other outreach to communicate the tax qualification requirements and IRS programs for the governmental plans community.

You also focused on abusive transactions. Any progress in this area?

Absolutely! Stopping abusive transactions continues to be an IRS-wide priority as we have teams working on several projects to identify and address emerging issues and abuses that jeopardize the private retirement system in America. We use promoter investigations to deter abusive schemes marketed to the retirement plans community. Learn about our progress in stopping these transactions on our EP Abusive Tax Transactions Web page.

If our readers have questions after reading your article, where can they go to get these questions answered?

Readers can e-mail their questions to RetirementPlanQuestions. We’ll call you with an answer so please include your name and phone number in the e-mail.

Page Last Reviewed or Updated: 14-Mar-2014