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ARTICLE · 03 JUNE 2015

IRS Updates EPCRS Correction Methods And Procedures

McDermott Will & Emery
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Significantly, the updates encourage employers to add automatic contribution features to their plans, providing for default contributions by participants.

United StatesEmployment and HR
Brian Benko
Brian Benko
Alan Nesburg, PC
Alan Nesburg, PC
Susan Peters Schaefer
Susan Peters Schaefer
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Reflecting comments it requested, and others it received, the Internal Revenue Service (IRS) recently issued two updates which modify the Employee Plans Compliance Resolution System (EPCRS), which is the comprehensive system for correction of retirement plan failures. Significantly, the updates encourage employers to add automatic contribution features to their plans, providing for default contributions by participants. Plans with automatic contribution features can use a new safe harbor to correct certain deferral failures, thereby reducing corrective contributions required of employers. The updates also encourage early correction of deferral failures by making available two safe harbors which feature reduced corrective contributions by employers.

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