The IRS recently made it easier (and less costly) to fix certain operational issues without the need for an IRS filing or payment of a user fee. This week, a reader asks: “Do your clients use the DOL and IRS correction programs?”
If you missed it, the IRS made it a truly “good” Friday when, in a major victory for the advocacy efforts of the American Retirement Association, new rules under the IRS’ Employee Plans Compliance Resolution System (EPCRS) were announced that now allow the self-correction program (SCP) to permit correction of certain plan document failures and certain plan loan failures, including the ability to correct defaulted plan loans, the failure to obtain spousal consent on a plan loan, and the failure of permitting plan loans that exceed the number of plan loans permitted under the terms of the plan. The revenue procedure also provides an additional method of correcting operational failures by plan amendment under SCP.
The ARA had submitted a comment letter to the IRS on April 4, 2018, recommending modifications to EPCRS that would expand the use of the SCP and reduce the burden imposed on small business plans by the new pricing structure that the IRS had put in place for the Voluntary Compliance Program (VCP) – and the newly expanded SCP, which accommodated a number of issues common among smaller plans may well mute some of the negative financial impact of changes in the VCP fee structure that disproportionately affected smaller plans.
All of which may have inspired the question from a reader – so this week, tell us whether (or not) your clients use these programs, to what extent, and what suggestions (if any) you have for these programs.
Respond to this week’s NAPA-Net reader poll at https://www.research.net/r/HT6QWM8.
And yes, we’ll have it all wrapped up for you on Friday!