As the IRS ramps up how it approaches qualified benefit plan audits, brokers should be working with their clients to ensure compliance.


“Employers must prepare for the Internal Revenue Service’s decision to employ a ‘focused examination’ approach to auditing retirement plans,” Wayne Kamenitz writes in Employee Benefit News. “These exams will try to curb systemic flaws or other issues before they become bigger problems down the road, while saving the federal government’s limited resources.”


These focused exams will allow IRS agents to analyze an employer’s internal process and controls related to benefits administration, including eligibility, vesting or distributions. “Then, agents will decide whether to close the examination or expand it,” Kamenitz writes “That puts the onus on companies to have strong internal controls in place, so that the IRS can move on quickly to other plan providers.”


Brokers can help clients first and foremost by making sure they’re complying with their own plans and the law. “Do you know with certainty whether your clients’ plan is operating in full compliance with the plan document?” Rhonda Berg writes for Employee Benefit Adviser. And, are you confident your client is operating within the law? “If you answered ‘no’ to either question, your client’s plan could be at risk.”


Try suggesting an operational compliance review to help figure it out. “An operational compliance reviewer wants to know that the process works, and whether it is replicable and consistent with the plan document,” Berg writes.


Brokers can also help clients choose high-quality licensed CPAs to conduct the plan audits the IRS is scrutinizing. “More than 7,300 licensed CPAs nationwide audit more than 81,000 employee benefit plans,” Andrea Davis writes for Employee Benefit News. “The Employee Benefit Security Administration’s review found that while 61 percent of audits fully complied with professional auditing standards or had only minor deficiencies under professional standards, the remaining 39 percent of the audits contained major deficiencies.”


Brokers’ skill in navigating the waters of audits and compliance are only going to help their clients, so these changes offer a new opportunity to provide value. Kamenitz strongly recommends employers work with experts like brokers “to make sure plan documents, internal controls and recordkeeping are sound, especially with the (IRS’ focus on) audits increasing.”


“Companies that are strong in these areas are more likely to preserve time and money, increase productivity, and allow the IRS to go after the plans that aren’t compliant,” he writes.

So remind clients — your role is to both help and protect them and help them make decisions that protect their companies. “No matter the benefit plan type, employers are always advised to seek the proper advice,” he writes.