If The Deadline For Self-Correcting Retirement Plan Errors Is Indefinite, Why Do I Have To Hurry?

Section 305 of SECURE 2.0 added rules for self-correcting a new category of retirement plan errors under the Employee Plans Compliance Resolution System ("ECPRS"). Specifically, Section 305 allows an "eligible inadvertent failure" to be self-corrected at any time, even if the error is considered a "significant" operational error under EPCRS. Section 305 provides that the correction period for eligible inadvertent failures is "indefinite and has no last day." Prior to Section 305, significant operational errors were required to be corrected no later than the last day of the third plan year after the plan year for which the failure occurred.

An eligible inadvertent failure means a failure that occurred notwithstanding established practices and procedures supporting Internal Revenue Code ("Code") compliance. An eligible inadvertent failure does not include a failure that is egregious, or that relates to the diversion or misuse of plan assets, or that directly or