Compliance May 5, 2006
IRS Revises Correction Program with New Corrections
May 5, 2006 (PLANSPONSOR.com) - The Internal Revenue
Service has issued a revenue procedure that revises and
expands the Employee Plans Compliance Resolution System
(EPCRS).
Reported by Rebecca Moore
According to the IRS the revision incorporates comments from the retirement plans community, particularly on the issues of excluded employees and bad loans. The procedure adds workable solutions for these issues, the IRS said.
The EPCRS provides a way for employers to correct errors caused by inadvertent oversights. The three levels of the program are:
- The Self-Correction Program (SCP) permits a plan sponsor to correct “insignificant operational failures” in certain simple plans, such as 403(b) plans, SEPs or SIMPLE IRA plans. These corrections can be made without having to notify the IRS and without paying any fee or sanction.
- The Voluntary Correction Program (VCP) allows a plan sponsor, at any time before an audit, to pay a limited fee and receive the IRS’s approval for a correction of a qualified plan, a 403(b) plan, SEP or SIMPLE IRA plan.
- The Correction on Audit Program (Audit CAP) allows a sponsor to correct a failure or an error that has been identified on audit and pay a sanction based on the nature, extent and severity of the failure being corrected.
The new revenue procedure is here .