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ARTICLE · 06 MAY 2019

New Self-Correction Opportunities For Retirement Plan Loans And Other Errors

Smith Gambrell & Russell
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Today the IRS issued an update to its retirement plan loan correction program that significantly expands the errors that can be corrected without filing with the IRS or paying a filing fee.

United StatesEmployment and HR
Lisa Carrasco
Lisa Carrasco
Randall A. Constantine
Randall A. Constantine
Andrew Fawbush
Andrew Fawbush
Emily E. Friedman
Emily E. Friedman
Glenn T. Infinger
Glenn T. Infinger
Teri King
Teri King
Don Mazursky
Don Mazursky
Kelly Meyers
Kelly Meyers
J. David Putnal
J. David Putnal
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Today the IRS issued an update to its retirement plan loan correction program that significantly expands the errors that can be corrected without filing with the IRS or paying a filing fee.

Most importantly, many plan loan errors can now be self-corrected. For example, if loan payments are missed but the maximum loan term (generally 5 years) has not yet expired, the loan can be corrected by repaying it in full or re-amortizing it over the original maximum loan term. This is the case even if the loan's normal cure period has already expired. An IRS filing is no longer required to correct a loan in this way.

The updated correction program also expands the ability to correct by retroactive amendment without an IRS filing. For example, if a plan inadvertently granted participants a 5% matching contribution instead of the 3% matching contribution provided for in the plan, it appears that the plan could be retroactively amended to provide for the 5% match. The new program

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