On July 16, the Internal Revenue Service (IRS) announced changes to the Employee Plans Compliance Resolution System (EPCRS). EPCRS is the program that allows plan sponsors to correct plan failures through three separate programs, depending on the nature of the error.
The Self-Correction Program (SCP) allows plan sponsors to make corrections without contacting the IRS or paying a fee. The Voluntary Correction Program is for errors that are not eligible for the SCP and requires the plan sponsor to notify the IRS and get approval of the correction. And finally, the Audit Closing Agreement Program (Audit CAP) is for errors found during an IRS audit.
The updates, found in Revenue Procedure 2021-30, make changes to all three programs. The IRS recognizes that prompt corrections are in the best interest of participants, and these changes follow that theme. Highlights include:
- Increasing the de minimis threshold for which a plan sponsor does not need to make a correction from $100 to $250
- Extending the SCP correction period for significant failures from two years to three years
- Removing the option for an anonymous VCP filing
- Adding a no-fee and anonymous VCP pre-submission conference under some circumstances
- Eliminating the requirement that an amendment to fix an operational failure under SCP that increases a benefit right or feature must apply to all participants
The IRS also notes that the EPCRS will be updated from time to time to include further improvements based upon comments received. The Treasury Department and the IRS invite further comments on improving EPCRS.
The prompt correction of an error is crucial to the successful running of a retirement plan. If you find an error, reach out to your ERISA counsel or a Multnomah Group consultant for help.
 Deadline for the SCP correction of significant failures is being extended to the last day of the third plan year following the plan year for which the failure occurred.
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