Tax News

CCH (cch.taxgroup.com) reports:

  The IRS has updated guidance on the Employee Plans Compliance Resolutions System (EPCRS), a voluntary correction program for failures and errors in employee retirement plans. EPCRS allows plan sponsors and plan professionals to correct certain plan errors and, thus, retain the tax benefits granted to qualified plans, Code Sec. 403(b) plans, simplified employee pensions (SEPs) and savings incentive match plan for employees (SIMPLE) IRAs. There are three levels of correction programs:

  (1) The Self-Correction Program (SCP) permits a plan sponsor to correct insignificant operational failures in plans without having to notify the IRS and without paying any fee or sanction.

  (2) The Voluntary Correction Program (VCP) allows a plan sponsor, at any time before an audit, to pay a limited fee and receive IRS approval for a correction of a plan.

  (3) The Audit Closing Agreement 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.

  The new guidance makes the following improvements in the existing EPCRS procedures:

  (1) The SCP is expanded to situations in which operational mistakes have been partially corrected when the plan comes under examination, and new examples include employees from Code Sec. 401(k) plans.

  (2) New VCP application procedures apply to SEPS, SARSEPS and SIMPLE IRAs, and existing application procedures are streamlined for several issues, including failure to amend plans for law changes, loan problems, failure to make minimum distributions to participants, excess elective deferrals made by participants to Code Sec. 401(k) plans and plans established by ineligible employers. The new guidance also makes it easier to use VCP to correct loan failures.

  (3) The guidance clarifies that, in particular cases, the IRS may decline to make EPCRS available in the interest of sound tax administration.

  The IRS expects to issue updated guidance to make further improvements to EPCRS and invites comments on how to improve the program. The IRS is particularly interested in comments regarding automatic enrollment in Code Sec. 401(k) plans, designated contributions to Roth IRAs, and efforts to make EPCRS more available to small employers.

  The new guidance is generally effective January 1, 2009, but plan sponsors may apply it on or after September 2, 2008. Rev. Proc. 2006-27, I.R.B. 2006-22, 945, and Section 3 of Rev. Proc. 2007-49, I.R.B. 2007-30, 141, are modified and superseded.

IR-2008-96,
2008FED ¶46,540

Rev. Proc. 2008-50, 2008FED ¶46,541

Other References:

 
Code Sec. 401

  CCH Reference - 2008FED ¶17,507.042

  CCH Reference - 2008FED ¶17,507.043

  CCH Reference - 2008FED ¶17,507.0432

  CCH Reference - 2008FED ¶17,507.0434

  CCH Reference - 2008FED ¶17,507.0437

  CCH Reference - 2008FED ¶17,507.2531

  CCH Reference - 2008FED ¶17,507.331

  CCH Reference - 2008FED ¶17,929.025

  CCH Reference - 2008FED ¶17,929.65

 
Code Sec. 403

  CCH Reference - 2008FED ¶18,282.11

  CCH Reference - 2008FED ¶18,282.41

 
Code Sec. 410

  CCH Reference - 2008FED ¶18,997.25

 
Code Sec. 411

  CCH Reference - 2008FED ¶19,076.954

 
Code Sec. 412

  CCH Reference - 2008FED ¶19,125.60

 
Code Sec. 415

  CCH Reference - 2008FED ¶19,218.0355

 
Code Sec. 501

  CCH Reference - 2008FED ¶22,604.10

 
Code Sec. 509

  CCH Reference - 2008FED ¶22,812.50

 
Code Sec. 521

  CCH Reference - 2008FED ¶22,882.196

 
Code Sec. 7121

  CCH Reference - 2008FED ¶41,090.10

 
Statement of Procedural Rules Sec. 601.201

  CCH Reference - 2008FED ¶43,360.2112

  CCH Reference - 2008FED ¶43,360.2113

  CCH Reference - 2008FED ¶43,360.2116

  CCH Reference - 2008FED ¶43,360.212

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  CCH Reference - TRC RETIRE: 51,450