Key Things You Should Know About Enrolled Retirements Plan Agents (ERPA)

As one of only a handful of financial professionals who still maintains the “ERPA” designation, I thought it would be worthwhile to share details about what that means and why it’s important for both our clients — and, really, any business owner who may be in a taxing (pun very much intended) situation with the IRS.

What exactly is an ERPA?

An Enrolled Retirement Plan Agent (ERPA) is a professional who is legally qualified to represent clients and plan sponsors regarding matters involving qualified plans and the Internal Revenue Service (IRS). Receiving a notice or letter from the IRS can be very intimidating and make people nervous enough to seek legal help from an attorney. However, an ERPA can provide valuable expertise during an IRS inquiry or audit by understanding the best steps to resolve any matter prior to contacting an attorney. The distinction between an ERPA and an attorney is generally the price but an ERPA can also work with an attorney to help mitigate costs of representation. An ERPA’s service fee is around $200 per hour, while an attorney often charges two to three more times that. An ERPA essentially functions as the middle man between the IRS and the client and negotiates a solution so both parties are pleased if needed.

How does one become an ERPA?

Well, if you were asking this question before February 12, 2016, the answer would be an exam called the ERPA Special Enrollment Exam (ERPA SEE). The two-part exam takes about three hours to complete and is good for three years until a renewal is required. Unfortunately, in 2016 the exam was discontinued due to a decreased volume of interested candidates. This means that no one else can become an ERPA, but those who were certified before 2016 are grandfathered in for life. Thankfully, as the Business Development Officer at FinDec, I am one of the 1,000 or so ERPAs in the country who can represent clients and plan sponsors in front of the IRS.

Why would you need an ERPA?

There are many different reasons why someone would need to hire an ERPA, ranging from filing a late Form 5500 or other plan related document all the way to major qualified plan audits and compliance issues. Typical inquiries have something to do with a problem with a qualified plan, for example issues range from a business having a retirement plan under audit toa business failing to include an employee on their plan who is eligible. These scenarios require correspondence with the IRS and an ERPA can ensure that your voice is heard and that your issue will likely be resolved quickly.

How can an ERPA help you?

There are three general ways and ERPA can correct a mistake that has been picked up by the IRS.

1. The first is to self-correct the mistake, which is as simple as making the required corrections, and placing a note in the file. This is sometimes called an insignificant operational error.
2. The next is voluntary compliance which consists of forms and paperwork and in return, the IRS gives its blessing to correct the mistake. As an ERPA I can submit and work with the IRS to gain approval of the corrective action proposed.
3. Lastly, in an audit scenario where the IRS finds something and will sanction or fine an individual or organization, an ERPA can represent the client in front of the IRS and resolve the issue. Many companies are surprised that you can use an ERPA and are very happy that it is possible. As an ERPA, I can help manage the correspence and offer reasonable corrective action. And potentially negotiate a more reasonable sanction or fine.

For more information or if you are in a situation in which you have questions about your retirement accounts — or, if you’ve received anything from the IRS about your company’s retirement plans that has you scratching your head, contact our team. We’re always available to help.

Kevin Mahoney