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IRA Financial Blog

Audit Risks and Retirement Plans – Episode 186

audit risks

IRA Financial’s Adam Bergman discusses the 2018 IRS audit numbers and the possibility that your retirement plan will be scrutinized.


The IRS recently released its audit data for Fiscal Year 2018. You can download and browse the latest data book on the IRS website. There are some impressive numbers in the book. For example, the IRS collected over $3 trillion, issued over $460 billion in refunds across 250+ million tax returns. But, what are the audit risks for your retirement plan?

Audit Risks

Let’s preface this by saying that if you follow all the IRS rules, you will never have anything to worry about. If you do get audited, simply follow all instructions and you will be in the clear.

Interestingly enough, the IRS does not release data on Individual Retirement Plans (IRAs). Simply put, most Americans with IRAs invest in traditional assets like stocks and bonds. There’s little chance of IRAs being abused because of this. Also, IRS Form 5498, that’s filed for IRAs, is generally submitted by the plan administrator.

However, there is data on 401(k) and other plans. The total number of returns that were examined for these plans was 15,562, which was a fraction of a percent more than 2017. IRS Form 5500, filed for employer-sponsored plans, saw a slight decline in examinations from 2,578 to 2,510.

More importantly for IRA Financial clients, Form 5500-EZ, filed for Solo 401(k) plans, saw an increase from the previous year. Still, only 340 returns were audited. This form must only be completed if you have at least $250,000 in assets in the plan. Otherwise, you are not obligated to file anything.

Lastly, also of note to clients, is Form 990-T, which is filed if you have Unrelated Business Taxable Income. or UBTI. 549 of such returns were audited last year.

Read This: 2018 IRS Audit Data & Your Retirement Plan

What Does this Mean for You?

As you can see, the audit risks for retirement plans are generally low. When you work with a trusted company, like IRA Financial, you can be assured your plan and its funds will be safe. No client of ours has ever been audited. But, if one was, we will be there for the entire process to prove you did nothing wrong.

Feel free to contact us at 800-472-0646 if you have any questions or concerns about potential audit risks.


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