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The Employee Ownership Report

NewsletterConcisely written for leaders in employee ownership companies and for service providers in the field, the NCEO's bimonthly newsletter, the Employee Ownership Report, is the most efficient way to stay informed about legal issues, current events, best practices, breaking research, management approaches, and communications ideas for employee ownership companies.

Available exclusively to NCEO members, the Employee Ownership Report is delivered in hard copy and all issues back to 1997 are available in the members-only area of the Web site.

Nonmembers are invited to read the sample article below from the current issue of the newsletter. Every time a new issue appears, the sample article on this page will be replaced by one from the new issue. Join online for only $90 to receive the Employee Ownership Report and all our other membership benefits.

Read a sample issue of the entire newsletter (September-October 2015).

Sample Article from the March-April 2016 Issue:

DOL and IRS Plan Audits

book coverBased on a presentation by Brian Anderson, DeWitt Ross & Stevens and Vicki Graft, ESOP Partners LLC

This article is excerpted from the new NCEO issue brief Great Ideas from the NCEO's 2015 Annual Conference, which summarizes many of the most interesting presentations at the 2015 Employee Ownership Conference in Denver.

The DOL and IRS conduct hundreds of audits of ESOPs every year. Audits can be triggered by several things:

Penalties for noncompliance with ERISA or plan terms can include fees, excise taxes, restoration of benefits, changes in plan operations, and, in extreme cases, loss of qualification. Common issues that arise in audits include:

If corrective actions are needed, the IRS will require correction to avoid penalties and plan disqualification. The IRS can impose penalties in prohibited transactions. The DOL will usually send a "notice letter" that identifies problems and offers a chance to discuss correction. If proper corrective action is taken, then the DOL will issue a "closing letter" identifying problems and corrective actions. If corrective action should be taken but is not, the DOL will refer the case to the DOL Office of the Solicitor for litigation. Depending on the circumstances, the DOL may seek:

Both the DOL and the IRS offer voluntary correction programs to fix problems that have been identified before they come up on audit. If problems are identified, work with counsel to select the right program.