Menu ≡

Our Blog

INDUSTRY STORIES, TRENDS, AND MORE

Received an IRS Letter About Your Retirement Plan? Here's What to Do

July 11, 2018

If you're a business owner, the reality is at some point you may receive a letter from the IRS regarding your company’s retirement plan (e.g. 401(k) Plan). Worse yet, the letter may even reflect that your company is being assessed a sizeable penalty due to some sort of compliance failure.

Don’t worry. You have fundamental rights when interacting with the IRS. In fact, listed below are some simple but important actions you can take to actively face this problem head on and return to what's really important: growing your business.

What to do when you get a letter from the IRS

Step 1: Read the entire letter carefully

Most letters deal with a specific issue and provide specific instructions on what to do. Read it several times to make sure you understand what they are asking for and what your next steps should be.

Step 2: Compare it with your retirement plan tax/information return

If a letter indicates a changed or corrected tax return, you should review the information and compare it with your original return and make sure to note any changes or differences between the two documents.

Step 3: Respond if you disagree

  • Respond to the letter by addressing the part in which you do not agree.
  • Mail a letter explaining why you disagree.
  • Mail your response to the address listed at the bottom of the letter.
  • Include information and documents for the IRS to consider that supports your response.
  • And, allow at least 30 days for a response from the IRS.

Step 4: Reply if you agree

There’s no need to contact the IRS. When a specific response date is in the letter there are two main reasons why you should respond by that date:

  • To minimize additional interest and penalty charges.
  • To preserve your appeal rights.

Step 5: Contact the IRS if necessary

For most letters, there’s no need to call the IRS or make an appointment at a taxpayer assistance center. If a call seems necessary, you can call the phone number in the upper right-hand corner of the letter. Make sure you have a copy of the tax return and letter on hand when calling.

Step 6: Contact Leading Retirement Solutions 

We regularly assist clients by recommending how to respond the IRS as well as prepare responses on your behalf. We understand your rights as a business owner and will help you navigate any compliance issues you may be facing.

Step 7: Keep the letter

In fact, it’s just smart to keep copies of any IRS letters or notices you receive with your tax records in case anything pops up in the future.

Furthermore, it would be a good idea to also become familiar with your Taxpayer Bill of Rights. Among other things, these rights dictate that letters from the IRS must include:

      • Details about what the taxpayer owes, such as tax, interest and penalties.
      • An explanation about why the taxpayer owes the taxes.
      • Specific reasons about why the IRS may have denied a refund claim.

For more tips and information regarding retirement plans, contact us.

Connect with us on FacebookLinkedIn, and Twitter!

*This article was adapted from a posting by the IRS: https://www.irs.gov/newsroom/what-taxpayers-can-do-when-a-letter-arrives-this-summer

What is a 403(b) Retirement Plan and How Does it Work?

There's more where that came from!
We have answers to all your retirement planning questions. Check out the rest of our blog content below.
 

Back To The Blog

Rollovers As Business Startups: 4 Most Common Compliance Issues

The Leading Cannabis 401(k)

Is your cannabis company considering retirement benefits? All of our cannabis-related content can be accessed here.

LEARN MORE

Invest In A Bitcoin 401(k)

Interested in buying bitcoin but don't know where to start? Find out about investing in Digital Assets through a 401(k) plan here.

LEARN MORE

The ROBS Strategy

Starting a business while you're strapped for cash? Learn more about the ROBS Business Financing Strategy here.

LEARN MORE

Back to the Blog

Website Design