The IRS has updated its online information on retirement plan correction procedures to reflect recent changes to the Employee Plans Compliance Resolution System (EPCRS).
Those changes were made by Rev. Proc. 2016-51, issued Sept. 29, which modified EPCRS to take into account the changes in the determination letter application program under Rev. Proc. 2016-37.
Key changes include the following:
Determination letter applications are no longer permitted when applying the correction programs under EPCRS. The requirement for a plan sponsor to submit a determination letter application to the IRS when correcting qualification failures that include a plan amendment no longer applies.
Fees. Fees associated with the Voluntary Correction Program (VCP) are now user fees and no longer set forth in the EPCRS revenue procedure. For VCP submissions made:
- in 2016, refer to Rev. Proc. 2016-8 and Rev. Proc. 2013-12 to determine the applicable user fee; and
- after 2016, refer to the annual employee plans revenue procedure that sets forth user fees to determine VCP user fees for that year.
Self-Correction Program. The availability of the IRS Self-Correction Program (SCP) for significant failures has been modified to provide that, for qualified individually designed plans, a determination letter need not be current to satisfy the Favorable Letter requirement.
The IRS also provides information on changes to the IRS Audit Closing Agreement Program (Audit CAP) and notes that:
- it will no longer refund half of the paid user fee if there is disagreement over correction in Anonymous Submissions; and
- it continues to accept comments from the public on expanding EPCRS correction rules to provide additional guidance on the recovery or recoupment of overpayments.
Effective Date
The IRS notes that Rev. Proc. 2016-51 is effective Jan. 1, 2017, and that plan sponsors may not apply provisions before that date. Rev. Proc. 2013-12, as modified by Rev. Proc. 2015-27 and Rev. Proc. 2015-28, are in effect for 2016.
