IRS issues update to EPCRS

The IRS has issued a revenue procedure revising its Employee Plans Compliance Resolution System (EPCRS). The EPCRS permits plan sponsors to correct certain plan qualification failures and thereby continue to provide their employees with retirement benefits on a tax-favored basis. The components of EPCRS are the Self-Correction Program (SCP), the Voluntary Correction Program (VCP), and the Audit Closing Agreement Program (Audit CAP). The revenue procedure updates the prior consolidated statement of the correction programs under EPCRS issued in 2008. The updated EPCRS procedures are generally effective April 1, 2013.

The revenue procedure contains modifications relating to the VCP program and to 403(b) plans, as well numerous other miscellaneous changes.

Modifications to VCP program

Under the updated procedures, all VCP submissions made on or after April 1, 2013, are required to include a completed Form 8950, Application for Voluntary Correction Program (VCP) Under the Employee Plans Compliance Resolution System (EPCRS), and a Form 8951, Compliance Fee for Application for Voluntary Correction Program Submission Under the Employee Plans Compliance Resolution System (EPCRS). New addresses must be used when mailing VCP submissions to the IRS. These procedures and addresses may be used by VCP applicants prior to April 1, 2013.

Modifications relating to 403(b) plans

The updated procedures generally permit plan sponsors maintaining 403(b) plans to correct a failure in the same manner that the same failure could be corrected under a qualified plan. In addition, the EPCRS is updated to coordinate with IRS Notice 2009-3 and the final 403(b) regulations that were issued in July 2007.

The definitions for 403(b) plans have been modified to add a definition of Plan Document Failure and to revise the definitions of Operational Failure, Demographic Failure, and Employer Eligibility Failure to coordinate with the new definition of Plan Document Failure. These definitions are revised for failures that occurred on or after the effective date of the regulations under Code Sec. 403(b). These regulations are generally effective for taxable years beginning on or after January 1, 2009. The definitions under Rev. Proc. 2008-50 apply to failures that occurred in taxable years beginning before January 1, 2009.

Future issuances

It is expected that the EPCRS revenue procedure will continue to be updated, in whole or in part, from time to time, including further improvements to EPCRS based on comments received. Thus, the IRS and Treasury Department continue to invite further comments on how to improve the EPCRS.

Source: IRS Rev. Proc. 2013-12.

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For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer’s Benefits Reports.

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