Skip to main content

You are here


ARA’s Wielobob, Groom’s Levine Explain SECURE 2.0 Self Correction Guidance

Regulatory Compliance

On Thursday, the Internal Revenue Service (IRS) released highly-anticipated guidance in the form of questions and answers involving expanding the Employee Plans Compliance Resolution System (EPCRS) included in Section 305 of SECURE 2.0.

While billed as interim guidance not meant to be comprehensive, it said plan sponsors may self-correct an “eligible inadvertent failure” (as defined in section 305(e) of the SECURE 2.0 Act) if certain conditions are satisfied and certain exceptions do not apply.

Among other issues, it also provided “interim interpretive guidance” that applies to corrections of eligible inadvertent failures.

It emphasized that it does not address section 301 of the SECURE 2.0 Act, which relates to the recovery of plan overpayments, or section 350 of the SECURE 2.0 Act, which relates to correcting automatic contribution errors in a plan described in section 401(a), 403(b), 408, or 457(b) of the Code. It also did not address any elements of section 305 of the SECURE 2.0 Act over which the Department of Labor has authority.

“Self-correction programs at both IRS and DOL are very popular with plan sponsors,” American Retirement Association General Counsel Allison Wielobob explained. “So, the expansion of EPCRS, the IRS program under SECURE 2.0, was definitely welcome. As almost any sponsor or TPA would tell you, hundreds of complex rules apply to running retirement plans, and mistakes occur.  

She added that the expanded EPCRS covers inadvertent benefit overpayments (with detailed correction procedures) and eligible inadvertent failures. And starting in 2024, auto-enrollment failures can also be corrected under EPCRS.  

“Though the IRS is asking for comments on the guidance that was just released, the Notice explicitly states that plan sponsors may rely on it now—which is helpful,” Wielobob said.

As the guidance noted, the three components of EPCRS are:

  1. The Self-Correction Program (SCP), under which a plan sponsor that has established compliance practices and procedures may self-correct certain plan failures without payment of any fee or sanction, provided certain conditions are satisfied;
  2. The Voluntary Correction Program (VCP), under which a plan sponsor, at any time before examination, may pay a limited fee and receive the IRS’s approval for correction of a plan failure; and
  3. The Audit Closing Agreement Program, under which a plan sponsor may correct certain plan failures identified on examination and pay a sanction. In addition to setting forth the requirements of the correction programs, Rev. Proc. 2021-30 sets forth correction principles, rules of general applicability, and certain acceptable correction methods under EPCRS.

While acknowledging the guidance doesn’t allow for “scrivener’s errors,” a type of clerical error due to a minor, unintentional mistake, Groom Law Group Principal and NAPA Net legal contributor David Levine also called the initial IRS guidance “very helpful.”

“It provides significant flexibility that allows for proactive corrections that can benefit participants and beneficiaries,” Levine concluded.

For more details on the new guidance, click here