On Oct. 4, 2018, the IRS issued a Program Letter outlining its compliance strategies and priorities for fiscal year 2019. They include:
- Determining whether workers have been misclassified as independent contractors rather than employees. While this is primarily an employment law issue, it can impact employee benefits. An employer who has misclassified an employee as an independent contractor could have liability under ERISA for excluding an otherwise eligible employee from coverage under the group health plan. Also, an applicable large employer must offer coverage to substantially all full-time employees working 30 hours or more per week. If employers misclassify workers as independent contractors and exclude them from group health plan eligibility, employers could be opening themselves up to risk, specifically under employer mandate Penalty A.
- Verifying that retirement plans are following correct distribution procedures
- Contacting employer plan sponsors who fail to file a Form 5500
- Examining 403(b) and 457 plans for compliance related to universal availability, excessive contributions and catch-up contributions
- Continuing to pursue referrals received from internal and external sources that allege possible noncompliance by a retirement plan
- Hiring 40 new revenue agents to process the applications that determine the exempt status of submitting organizations
While it may be helpful for employers to see the areas where the IRS will focus their enforcement efforts in fiscal year 2019, compliance in all areas related to employer sponsored plans should always be a priority. If you have any questions related to your plan’s compliance, please contact your advisor for assistance and resources.
Source: NFP BenefitPartners
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