Is the IRS’ Self-Correction Program Available to Governmental Plans?

Q: May governmental plans self-correct plan defects under the Self-Correction Program (SCP) as part of the IRS’ EPCRS program?

Kimberly Boberg, Kelly Geloneck, Emily Gerard and David Levine, with Groom Law Group, and Michael A. Webb, senior financial adviser at CAPTRUST, answer:

A: Though governmental 457(b) plans are not explicitly excluded from self-correction under EPCRS, practically, such program would generally not be needed by such plans.  In fact, the Code itself provides relief for failures under these plans. As the IRS explains on its website, governmental plan sponsors may self-correct their 457(b) plan failures under Code Section 457(b)(6) and related regulations authorizing such correction.  In fact, this self-correction right remains available until the first day of the plan year that begins more than 180 days after the IRS provides notification of the failure(s). Of course, as with all corrections of plan failures, outside retirement plan counsel should be consulted prior to proceeding.

NOTE: This feature is to provide general information only, does not constitute legal advice and cannot be used or substituted for legal or tax advice.

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