IRS to scrutinize big pension plans; Audit program stepped up.(News)

Byline: JUDY GREENWALD

WASHINGTON-Employers with large pension plans should brace themselves for the possibility of extensive Internal Revenue Service audits of their defined contribution and defined benefit plans.

A two-year, limited pilot program of the IRS to increase its pension audit activity of large plans became permanent last October. There are now six regional employee benefit plan audit teams, each poised to conduct 15 examinations each year of pension plans with 2,500 or more participants.

In the past, IRS audits have been conducted on a "catch-as-catch-can basis,'' said Fred Rumack, national director of tax and legal services at Mellon Human Resources & Investor Solutions in New York. Now, though, the IRS has teams of experts "looking to resolve issues and find problems, if they exist,'' said Mr. Rumack.

There are steps, though, that an employer can take to prepare for a possible IRS …