May 21, 2015

The IRS recently provided updated guidance on the Employee Plans Compliance Resolution System (“EPCRS”). Many employers and plan sponsors use EPCRS to fix administrative mistakes or document errors for their 401(k), 403(b), defined benefit, or other qualified retirement plan. EPCRS allows plan sponsors to correct errors through either a voluntary IRS filing (VCP) or self-correction.

In two recent Revenue Procedures, the IRS expanded the methods of correction for several categories of failure, including for Internal Revenue Code (“Code”) Section 415 failures, required minimum distribution (“RMD”) failures, overpayments to participants, and automatic enrollment or automatic escalation features. In welcome news, the IRS has lowered compliance fees for plan loan failures and RMD failures. It will also cost plan sponsors less to fix auto enroll or auto escalation errors.

The guidance is found in the newly issued Revenue Procedures 2015-27 and 2015-28, making several important changes to the EPCRS.

For a full summary of new IRS guidance on EPCRS, please click here.