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ARTICLE · 29 JULY 2021

Updates To IRS Correction Principles For Qualified Plans

Haynsworth Sinkler Boyd
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The IRS Employee Plans Compliance Resolution System (EPCRS) permits any plan sponsor of a retirement plan (including SEP and SIMPLE IRA plans) to correct plan failures. Three correction programs exist:

United StatesEmployment and HR
Arthur F. McLean III
Arthur F. McLean III

The IRS Employee Plans Compliance Resolution System (EPCRS) permits any plan sponsor of a retirement plan (including SEP and SIMPLE IRA plans) to correct plan failures. Three correction programs exist:

  1. Self-Correction Program (SCP) - authorizes corrections, consistent with recommended fixes for problems, without contacting the IRS or paying a fee;
  2. Voluntary Correction Program (VCP) - authorizes corrections that are not eligible for SCP and involve obtaining the approval of the IRS that the failures were properly corrected; and
  3. Audit CAP - the program for correcting failures discovered by the IRS or during an IRS audit that cannot be corrected using SCP.

Effective July 16, 2021, the IRS made significant changes that are in most cases beneficial to plan sponsors, participants and the retirement plan community. Those changes were published in IRS Revenue Procedure 2021-30. A plan sponsor may now fix an operational failure in a defined benefit plan that

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