Note:

A SARSEP that fails IRC 408(k) may also result in a discrepancy adjustment and or IRC 4973 excise tax.

Appeal rights are not offered to the employer for an IRA-based plan found to be non-compliant with the Internal Revenue Code and not resolved through Audit CAP. Non-compliant IRA-based plans are therefore not subject to mandatory review. We would offer Appeal rights for related returns, though as discussed in paragraphs b), c) and d) below.

Do not, therefore, prepare a 30-Day letter with a Revenue Agent Report (RAR) for the NRU examination.

With your manager approval, propose taxable adjustments as discrepancy adjustments on the related Forms 1040 of plan participants (normally highly compensated participants), and provide appeal rights for any related Form 1040 discrepancy adjustment.