On July 16, 2021, the IRS released updated Employee Plans Compliance Resolution System (EPCRS) guidance for Plan corrections in the form of Rev. Proc. 2021-30. The changes affect the three programs offered by the IRS for correction of plan failures: Self-Correction Program (SCP), Voluntary Correction Program (VCP) and Audit Closing Agreement Program (Audit CAP). The principal changes outlined below are effective as of July 16, 2021, unless otherwise indicated.

• Relaxed requirements for SCP via retroactive plan amendment. The IRS has removed the requirement that a corrective retroactive plan amendment for an operational error must benefit all plan participants, making this correction method available to retroactively correct a plan for a subset of eligible employees. Such a retroactive amendment still must provide for an increase in a benefit, right or feature for the applicable group of eligible employees, and be a permissible provision under the IRS Code. This SCP correction method may be used only if the correction is completed by the last day of the third plan year following the plan year for which the failure occurred.
• Extension of SCP Safe Harbor Sunset Period. The safe harbor correction method to fix errors involving missed elective deferrals for eligible employees in a plan with an automatic enrollment feature has been extended from December 31, 2020 through December 31, 2023. In effect, the IRS moved the sunset date thereby allowing this safe harbor correction method to be used for any error commencing prior to December 31, 2023, including errors during the first part of 2021.
• Self-Correction period for significant operational failures expanded from 2 to 3 years. The SCP deadline for correction of certain significant operational failures and plan document failures is now the end of the third plan year following the year for which the failure occurred.
• Increased de minimis correction amount. The de minimis amount in which a sponsor is not required to make certain corrections for an individual has been increased from $100 to $250.
• Overpayment corrections for defined benefit plans. The new guidance reduces the need to seek repayment from participants affected by an overpayment if the defined benefit plan meets certain funding criteria; and in some cases, the employer will not be required to reimburse the plan for some or all of the overpayments. If a plan does not meet the specific funding criteria, it may be able to use the contribution credit correction method, which limits the amount required to be recouped from a participant or repaid to the plan.
• Anonymous VCP submissions no longer permitted – Effective January 1, 2022, anonymous VCP submissions are no longer permitted.
• Anonymous Pre-Submission VCP Conferences – Effective January 1, 2022 the IRS will permit a sponsor to schedule a pre-submission conference on an anonymous basis at no cost. Such a conference will allow the sponsor to obtain IRS input on a potential correction without revealing the plan. Following the conference, if the sponsor wishes to move forward with a VCP submission, it cannot be anonymous.
• Audit CAP fees paid through pay.gov – Effective January 1, 2022, Audit CAP fees must be paid online using pay.gov.

While these changes can be helpful to plan sponsors, each situation should be evaluated based on the specific facts and circumstances to ensure the requirements of the various correction programs are followed.