Employee Plans Compliance Unit (EPCU) - Current Projects - Funding Deficiencies
Why did I receive an EPCU Compliance Check Letter?
When a funding deficiency is reported on a filed return, the EPCU will determine whether a funding deficiency exists.
If it appears one does exist, we send the applicable compliance check letter:
Defined benefit plan with a Form 5330 filed (2015 filing)
Defined benefit plan – no Form 5330 filed (2015 filing)
Defined benefit plan filing a Form 5500SF without Schedule SB
Defined benefit plan filing a Form 5500 or 5500SF with a Schedule SB 5330 filed
Defined benefit plan filing a Form 5500EZ
Defined benefit plan filing a Form 5500 or 5500SF with a Schedule SB No 5330 filed
Defined contribution plan
We will determine whether the funding deficiency was corrected, the required excise tax return(s) were filed and appropriate taxes paid. Correction for late or underfunded defined contribution Money Purchase Pension or Target Benefit plans may also involve a VCP submission (see Other Resources below).
What is the EPCU attempting to determine?
The EPCU Funding Deficiencies Project is focused on Forms 5500/5500EZ/5500SF reporting funding deficiencies on Schedules B, MB, SB, R, or Forms 5500EZ & 5500SF - lines 11-a or 12-d of the return. Compliance checks are conducted to determine whether:
- The funding deficiency has been corrected or if not why.
- The applicable Forms 5330 reporting excise tax under IRC section 4971 have been filed for defined benefit plans.
- Defined contribution Money Purchase Pension Plans or Target Benefit Plans have completed correction.
- The sponsor has filed for a funding waiver, termination, PBGC distress termination, or bankruptcy.
Information is sometimes reported incorrectly on the series of Form 5500 filings. In order to avoid unnecessary contacts, please double check your return before filing to ensure:
- The amounts shown for the required funding amount, contributions made, and unpaid required minimum funding amount are included and correct.
- Double-check the information to be sure it is reflected on the correct line item. A common error for defined contribution plans is the amount of contributions is incorrectly input as the unpaid required amount instead.
- The correct plan number is used.
- Each Plan has a different plan number.
If you have misplaced your correspondence and no longer have the return address, you can mail your response to:
IRS – EPCU
324 25th Street Room 6025 M/S 1113
Ogden, UT 84401-2344
What actions do I need to take?
Please provide the information requested in the Form 886-A attached to your letter. If you are required to file a Form 5330, this should be sent to the address shown at the top of the letter.
You may furnish other documents or clarifying material that you believe will be helpful for us to review. You should make every effort to answer the questions as accurately as possible. Failure to provide this information could result in further action or examination of your plan.
If you need additional time, please contact the person whose name is listed on the cover letter to request an extension prior to the response due date.
If You Have Questions
Please feel free to contact the person listed in the cover letter with questions about this project and how it relates to your situation. You may make contact by phone, mail or email; however our responses will only be made by mail and telephone.
The content of this project is the result of collaboration between the Treasury Inspector General’s office and Examinations areas within Employee Plans of Tax Exempt and Government Entity (TE/GE). EPCU will mail the compliance contact letter and information request to plans identified as reporting a funding deficiency amount. The information request includes a Form 886-A. If the sponsoring organization appears compliant, the contact will be resolved, and we will issue a closing letter notifying the sponsoring organization. Failure to provide this information, fully fund your plan, or file necessary Form 5330 returns reporting an applicable excise tax, could result in further action or examination of your plan.
The information gathered from this project will result in a report issued by the IRS describing responses and identifying areas where we need additional education, guidance, or outreach.
- Form 5500 Corner
Schedule MB, Multiemployer Defined Benefit Plans and Certain Money Purchase Plan Actuarial Information
Schedule R, Retirement Plan Information
Schedule SB, Single-Employer Defined Benefit Plan Actuarial Information
- Form 5500-EZ (Instructions), Annual Return of One-Participant (Owners and Their Spouses) Retirement Plan
EP Examination Process Guide – This section describes the participant rights with regard to Request of a Waiver of the Minimum Funding Requirement.
Employee Plans News - March 23, 2011 - Employee Plans Compliance Unit’s Funding Deficiency Project