IRS Relief Available Until April 1 For 403(B) Plan Sponsors Under Audit

The Internal Revenue Service (IRS) recently announced in its electronic newsletter that it will provide limited transitional relief to 403(b) plan sponsors that are under audit or that receive notice of an audit between now and April 1, 2013. Though plans under audit typically cannot voluntarily correct plan errors (and must pay a higher penalty to correct those errors), plan sponsors availing themselves of the transitional relief will pay only the reduced penalty that applies to voluntary corrections under the IRS's Employee Plans Compliance Resolution System (EPCRS).

Background

On December 31, 2012, the IRS released Revenue Procedure 2013-12 (the Revenue Procedure), which expanded EPCRS provisions to permit 403(b) plan sponsors that failed to timely adopt a written plan document by December 31, 2009, to make corrections under the Voluntary Correction Program (VCP) under EPCRS. The VCP allows plan sponsors to voluntarily disclose plan errors, submit