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Case of the Week: Top 11 IRS Plan Compliance Concerns

ERISA consultants at the Learning Center Resource Desk, which is available through Columbia Threadneedle Investments, regularly receive calls from financial advisors on a broad array of technical topics related to IRAs and qualified retirement plans. A recent call with a financial advisor in Illinois is representative of a question we commonly receive related to plan compliance errors. The advisor asked: 

“Does the IRS have a list of top 10 plan compliance errors?” 

Highlights of Discussion

Yes. In fact, the IRS has identified 11 “failures” across all plan types through audits, voluntary compliance submissions, determination letter applications and annual Form 5500. The most common errors are the failures to:

1. Amend the plan document for tax law changes by the end of the period required by law

2. Follow the plan document’s definition of compensation for determining contributions

3. Follow the plan document’s eligibility provisions

4. Satisfy Code Section 401(a)(9) required minimum distributions

5. Follow the in-service distribution provisions of the plan document

6. Provide correct distribution forms, make timely distributions and prepare correct tax reporting of distributions

7. Follow the plan’s vesting schedule

8. Retain records

9. Maintain internal controls (i.e., prevent errors related to plan administration)

10. Follow the terms of a qualified domestic relations order (QDRO) related to divorce

11. Satisfy the limits of Code Section 415 (i.e., ensure a plan participant does not exceed his or her annual contribution limit of $53,000 for 2015 or $59,000 if he or she is age 50 or over and making catch-up contributions)

Not only has the IRS identified these common compliance concerns, it offers tips on how to correct and avoid these errors in the future. 


One easy way financial advisors can support their plan sponsor clients is to be on the lookout for the top 11 plan compliance errors that have been identified by the IRS and address them before the IRS does.

The Learning Center Resource Desk is staffed by the Retirement Learning Center, LLC (RLC), a third-party industry consultant that is not affiliated with Columbia Threadneedle. Any information provided is for informational purposes only. It cannot be used for the purposes of avoiding penalties and taxes. Columbia Threadneedle does not provide tax or legal advice. Consumers consult with their tax advisor or attorney regarding their specific situation. 

Information and opinions provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Columbia Threadneedle.


Columbia Threadneedle Investments (Columbia Threadneedle) is the global brand name of the Columbia and Threadneedle group of companies.

© 2015 Columbia Management Investment Advisers, LLC. Used with permission.