Compliance March 29, 2011

403(b) Errors Ineligible for IRS Voluntary Correction Program

March 29, 2011 (PLANSPONSOR.com) – The Internal Revenue Service said recently, it has received several Voluntary Correction Program submissions for 403(b) retirement plan failures that are currently ineligible for correction through VCP.
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Ineligible submissions include cases where: 

  • the plan’s written program did not satisfy the legal requirements under Code §403(b) and the 403(b) final regulations, or the plan failed to adopt a written plan program before December 31, 2009; or 
  • the plan failed to operate according to its written program’s terms.  

 

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The agency said it will return all VCP submissions (including fees) containing ineligible failures.  

An employer sponsoring a 403(b) plan may currently use VCP to correct employer eligibility and demographic failures, and the operational failures listed in Revenue Procedure 2008-50 §5.02(2)(a). The IRS said it is in the process of updating Revenue Procedure 2008-50 to expand EPCRS to include post-December 31, 2008 failures.

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