Question

When determining if an employee benefit plan administered by the Trust Department is a qualified plan, as defined by the IRS, the trust auditor should look for:

a. a written legal opinion by the attorney that drafted the plan document.
b. a favorable determination letter from the IRS.
c. a written legal opinion by external counsel.
d. DOL certification.

Answer 1

A trust auditor should look for a favorable determination letter from the IRS to ensure an employee benefit plan is a qualified plan as defined by the IRS standards for tax-advantaged status.

Step-by-step explanation:

When determining if an employee benefit plan administered by the Trust Department is a qualified plan, as defined by the IRS, the trust auditor should look for a favorable determination letter from the IRS. A qualified plan is one that meets the standards set by the Internal Revenue Code for tax-advantaged status, meaning the plan can offer certain tax benefits to the employer and employee. The determination letter from the IRS signifies that the plan has been reviewed and is in compliance with the appropriate codes and regulations.