IRS Releases Updated Retirement Plan Correction Procedures

The IRS recently released the long-awaited updated version of the Employee Plans Compliance Resolution System (EPCRS), Revenue Procedure 2013-12. EPCRS allows the sponsor of a tax-deferred retirement plan to voluntarily correct plan qualification failures. The primary change to EPCRS is the expansion of the correction methods available for 403(b) plans. In addition, there are a number of other key changes, some of which are described below. The new EPCRS applies as of April 1, 2013, although plan sponsors may choose to use it now.

Correction of 403(b) Plan Document Failures Now Available

Prior to January 1, 2009, 403(b) plans were not required to have written plan documents. As such, there was no concept of a "403(b) plan document failure" in the prior versions of EPCRS. As of January 1, 2009, however, 403(b) plans must have written plan documents, but there has been no way to correct the failure to timely adopt a 403(b) plan document until now.