IRS Releases Updated Retirement Plan Correction Procedures


The IRS recently released the long-awaited updated version of the Employee Plans Compliance Resolution System (EPCRS), Revenue Procedure 2013-12. EPCRS allows the sponsor of a tax-deferred retirement plan to voluntarily correct plan qualification failures. The primary change to EPCRS is the expansion of the correction methods available for 403(b) plans. In addition, there are a number of other key changes, some of which are described below. The new EPCRS applies as of April 1, 2013, although plan sponsors may choose to use it now.

Correction of 403(b) Plan Document Failures Now Available

Prior to January 1, 2009, 403(b) plans were not required to have written plan documents. As such, there was no concept of a “403(b) plan document failure” in the prior versions of EPCRS. As of January 1, 2009, however, 403(b) plans must have written plan documents, but there has been no way to correct the failure to timely adopt a 403(b) plan document until now.

The new EPCRS allows 403(b) plan document failures to be submitted to the IRS under the Voluntary Correction Program (VCP). During 2013, a 403(b) plan sponsor that did not timely adopt a plan document (by December 31, 2009) may submit a VCP application and pay only 50% of the generally applicable VCP fee based on plan size. After 2013, the full fee will apply.

The new EPCRS also extends to 403(b) plans certain other EPCRS concepts previously applicable only to qualified plans.

Please see full alert below for more information.

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Topics:  403(b) Plans, EPCRS, IRS, Qualified Retirement Plans, Retirement, Retirement Plan

Published In: Finance & Banking Updates, Insurance Updates, Labor & Employment Updates, Tax Updates, Wills, Trusts, & Estate Planning Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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