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. EPCRS now allows plans with automatic contribution features to use a new safe harbor to correct certain deferral failures, provides more flexible correction provisions on overpayments and excess annual additions, and reduces certain correction filing fees.
Join McDermott partner, Susan Peters Schaefer, at a Worldwide Employee Benefits Network Chicago Chapter breakfast meeting that will cover operational errors in retirement plans.
Mistakes can and do happen, especially in the complex world of retirement plans. In recognition, the U.S. Internal Revenue Service (IRS) created the Employee Plans Compliance Resolution Program (EPCRS) to help retirement plan sponsors fix operational errors either through self-correction or through an IRS application and approval process. In April, the IRS revised and expanded the correction rules under EPCRS. Here experts will explain the new and old correction rules for retirement plans and provide some real life examples and guidance.
Wednesday, June 24, 2015
7:30 am CDT – Breakfast and Networking
8:00 – 9:00 am CDT – Program
Northern Trust Conference Center
50 South LaSalle Street
Chicago, IL 60603
To register for the event, click here.
by Mary K. Samsa, Todd A. Solomon and Joseph K. Urwitz
On February 21, 2013, the Internal Revenue Service (IRS) added to its “self-help” resources a new “403(b) Plan Fix-It Guide” to provide guidance more specifically directed at 403(b) plan sponsors that identify qualification or operational plan failures under their 403(b) plans. Additionally, the IRS issued as a companion piece a booklet entitled “Voluntary Correction Program Submission Kit,” which provides more detailed directions to 403(b) plan sponsors on how to complete and file a correction filing with the IRS specifically relating to the failure to adopt a written 403(b) plan document.
This new “fix-it” tool addresses 10 potential errors (likely the most common 403(b) plan errors), including, but not limited to, ineligible organizations offering 403(b) plans, failure to adopt a written plan document as required by the final 403(b) regulations, violation of the universal availability rule, failure to appropriately limit elective deferrals and failure to follow the underlying terms of the plan document. Although these types of failures are not necessarily new (i.e., they could have occurred in prior years), the IRS is slowly bringing 403(b) plans under more scrutiny as the dollars being contributed to these types of plans continue to increase. The IRS is developing more expertise in this area and is training more agents to be able to identify the particular differences between 401(k) plans and 403(b) plans, and the specific nuances and legal requirements of operating 403(b) plans. Since the 403(b) regulations were issued in 2007, this is the first step in which the IRS is taking a more active role to ensure compliance under these types of plans.
Revenue Procedures 2013-12 (Employee Plans Compliance Resolution System, or EPCRS) may be used with respect to any 403(b) plan corrections going forward. It incorporates in greater detail the “403(b) Plan Fix-It Guide.” Although prior EPCRS guidance such as Revenue Procedure 2008-50 was often applied to 403(b) plans by analogy for correcting errors, new Revenue Procedure 2013-12 is drafted to be directly applicable to 403(b) plans. Consequently, given the IRS movement toward greater scrutiny of 403(b) plans, tax-exempt organizations that have not recently conducted any type of internal compliance review are encouraged to review, at a minimum, the mistakes highlighted in the “403(b) Plan Fix-It Guide” to determine whether greater analysis is required with respect the compliance and operation of their 403(b) plans.
by Lisa K. Loesel, Mary K. Samsa and Kary Crassweller
The Internal Revenue Service (IRS) recently updated the Employee Plans Compliance Resolution System (EPCRS), the comprehensive system of correction programs for sponsors of qualified retirement plans. The components of EPCRS continue to be the Self-Correction Program, the Voluntary Correction Program (VCP) and the Audit Closing Agreement Program. This newsletter describes some of the significant changes to EPCRS, including revisions to the VCP submission procedures and enhanced access for 403(b) plans.
To read the full article, click here.
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