WASHINGTON--The Internal Revenue Service (IRS) has improved its process for selecting potentially noncompliant retirement plans for examination, according to a report publicly released today by the Treasury Inspector General for Tax Administration (TIGTA).

This has resulted in an increase in the percentage of examinations where the IRS detects noncompliance with the Internal Revenue Code (IRC).

The IRS examines retirement plans to determine whether the plans are operating in accordance with the tax exempt qualification provisions of the IRC and within the terms of the plan document. If a retirement plan is not in compliance, the IRS works with retirement plan officials to resolve examination issues and make the plan compliant. In this way, examinations help to ensure that retirement plan participants receive the benefits the plan promises.

At the request of the IRS, TIGTA reviewed whether processes for selecting examination cases allowed for emerging issues to be considered and took into account the risk of noncompliance for the various types of retirement plans such as 401(k) and pension plans.

"In these tough economic times, it is even more important that the IRS ensure that retirement plans comply with all applicable statutes and regulations to provide plan participants with greater assurance that promised benefits will be available upon retirement," said J. Russell George, the Treasury Inspector General for Tax Administration.

TIGTA made no recommendations in this report.