Legislative Highlights

Oct 26, 2023 | 2023, Retirement Plan Law

Supercharging Retirement Plan Fixes: IRS Revamps EPCRS with SECURE 2.0

The Internal Revenue Service (IRS) rolled out fresh guidance about the Employee Plans Compliance Resolution System (EPCRS) and its expansion under the SECURE 2.0 Act in the form of Notice 2023-43 on May 25, 2023. EPCRS is the self-correction program for retirement plan errors, allowing employers to prevent their plans from being disqualified.

EPCRS Breakdown: Three avenues to correct the mistakes:

  1. Self-Correction Program (SCP): Plan sponsors are permitted to correct certain plan failures without contacting the IRS or paying a fee.
  2. Voluntary Correction Program (VCP): Plan sponsors are permitted to pay a fee and receive IRS approval for correction of plan failures (only before a plan audit).
  3. Audit Closing Agreement Program (Audit CAP): Plan sponsors must pay a sanction and correct a plan failure while the plan is under audit.

The Old EPCRS Program:

The initial EPCRS setup was detailed in Revenue Procedure (Rev. Proc.) 2021-30. It allowed plan sponsors to self-correct certain significant operational and document errors. But not everything could be self-corrected, such as document, loan, and eligibility errors.

SECURE 2.0 Shakes Things Up:

Enter SECURE 2.0. This update widens the scope for proactive self-corrections. Plan sponsors can now tackle any “eligible inadvertent failure” at any time. An “eligible inadvertent failure” is a mistake that:
The IRS hasn’t flagged before any self-correction attempts.

  • Can be fixed within a reasonable period.
  • Isn’t egregious.
  • Doesn’t involve misusing plan assets.
  • Isn’t linked to tax avoidance transactions.
  • Occurs despite following proper practices.

 Guidance Refresh: Notice 2023-43:

This notice explains that plan sponsors can immediately start self-correcting certain eligible inadvertent failures; however, some cannot be corrected under the new program until officially updated by the IRS (no later than December 29, 2024). These include:
Failing to adopt an initial written plan document

  • Orphan plan failures
  • Significant failures in terminated plans
  • Demographic errors
  • Operation errors leading to less favorable participant benefits
  • ESOP failures with non-disqualification tax issues
  • SEP or SIMPLE IRA failures with excess contributions remaining
  • in IRA or for plans that do not use model/prototype document

What is the “Reasonable Period” for Self-Correction?

The notice spells out that you must correct errors within a “reasonable period” after identifying them. Most eligible inadvertent failures should be fixed no later than the end of the 18th month after spotting the issue. You can even self-correct an eligible error post-identification if you can show a “specific commitment to implement a self-correction”, which means precisely identifying the error and actively working to correct it.

Future Guidance:

Bear in mind, Notice 2023-43 only provides guidance, not the final word. We will continue to monitor these changes and communicate any updates as well as support you through any potential required corrections or audits.

Your Alliance team is just a call away, so reach out – we’ve got your back!

Your Alliance Consultant Team is here to help. Reach out to us with any questions you have about the EPCRS Self-Correction Program. 


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