By Payroll and Entitlements Editorial Staff
The IRS has updated its Employee Plans Compliance Resolution System (EPCRS) for sponsors of retirement plans that want to correct plan failures. EPCRS includes the Self-Correction Program (SCP), the Voluntary Correction Program (VCP), and the Audit Closing Agreement Program (Audit CAP). Rev. Proc. 2018-52, I.R.B. 2018-42, 611, is modified and superseded.
Self-Correction Program Expanded. Under SCP, a plan sponsor that had established compliance practices and procedures may self-correct certain plan failures without submitting the correction to the IRS for approval and without paying any fee or sanction to the IRS. The updated procedure expands the use of the SCP to permit correction of certain plan document failures and plan loan failures, including:
- the ability to correct defaulted plan loans;
- the failure to obtain spousal consent on a plan loan; and
- the failure of permitting plan loans that exceed the number of plan loans permitted under the terms of the plan.
The revisions also provide an additional method of correcting operational failures by plan amendments under SCP.
VCP Must be Submitted Electronically. Beginning April 1, 2019, all Voluntary Compliance Program submissions electronically using Pay.gov. Any paper VCP submissions postmarked after March 31, 2019, will be returned to the applicant.
Plans Correctable Under EPCRS. Sponsors of retirement plans use EPCRS to satisfy the requirements of Code Secs. 401(a), 403(a), 403(b), 408(k) or 408(p) if they have not met these requirements for a period of time. (IRS Rev. Proc. 2019-19, IRB 2019-19, May 6, 2019.)
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