The IRS Employee Plans Compliance Resolution System (EPCRS) allows a plan sponsor to correct plan operational failures using three correction programs: Self- Correction Program (SCP), Voluntary Correction Program (VCP), and Audit CAP.
Recently the IRS made changes to EPCRS via Revenue Procedure 2021-30. A summary of these changes is as follows:
- Overpayment corrections – revises correction principles relating to failures that occur when participants receive payments from defined benefit plans that exceed what is permitted by the terms of the plan, effective July 16, 2021. The new principles lessen the need to seek repayment from participants who received overpayments, and may not require the plan sponsor to reimburse the plan.
- Self-correction for significant failures – extends the correction period from two to three years, effective July 16, 2021.
- Self-Correction for retroactive plan amendments – increases use of retroactive plan amendments to correct failures by removing the requirement that all plan participants benefit from the retroactive amendment, effective July 16, 2021.
- VCP submissions – eliminates anonymous submissions, effective January 1, 2022.
- Pre-Submission conferences – permits plan sponsors (at no cost) to make anonymous written requests for a conference before submitting to the VCP, effective January 1, 2022. Subsequent to this conference, the VCP request can no longer be anonymous.
- Automatic enrollment failures – extends the safe harbor correction method to correct missed elective deferrals for participants subject to automatic enrollment
- De Minimis corrections – increases the threshold for certain de minimis amounts that do not require correction from $100 to $250.
This article is an excerpt from Dopkins Employee Benefits Newsletter.
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For more information, please contact Chrissy Schmitt at firstname.lastname@example.org.
About the Author
Christine D. Schmitt CPA
Chrissy performs audit and review services for industries ranging from Non for profit to manufacturing. She is a graduate of the Amherst Chamber of Commerce Emerging Business Leaders program.