New and Improved Retirement Plan Correction Program Includes Crucial 403(b) Relief

On December 31, 2012, as Times Square in New York was getting ready to drop the crystal ball, the Internal Revenue Service (IRS) dropped long-awaited guidance regarding retirement plan corrections in the form of Revenue Procedure 2013-12. This Revenue Procedure updates the Employee Plans Compliance Resolution System (EPCRS), which includes the Voluntary Correction Program (VCP), and provides guidance on methods available to sponsors of tax-qualified retirement plans to correct operational and plan document errors in order to preserve a plan’s tax-qualified status. Rev. Proc. 2013-12 provides crucial relief for 403(b) plans and a potpourri of other enhancements and clarifications to EPCRS, which was last revised in Rev. Proc. 2008-50. EPCRS provides three correction programs known as: (1) Self-Correction Program (SCP); (2) VCP; and (3) Correction on Audit Program (Audit CAP).

For many employers that have 403(b) plans and other types of qualified plans, this guidance provides an excellent opportunity to maintain tax-favored benefits from these plans while avoiding substantial penalties that may occur upon future audit.

For more details on these significant changes, read the full article here.

John Wentzell is a shareholder in Ogletree Deakins’ Greenville, SC office. David Rosner is Of Counsel in the firm’s Washington, DC office.

 

Topics:  403(b) Plans, Audits, Compliance, EPCRS, IRS, Retirement Plan, Voluntary Correction Program

Published In: Administrative Agency Updates, Finance & Banking Updates, Labor & Employment Updates, Tax 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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