The Internal Revenue Service’s (IRS) Employee Plans Compliance Resolution System (EPCRS) allows employers to correct errors involving the maintenance and operation of tax-qualified retirement plans. Depending on the severity of the error and the length of time the error has persisted, some corrections might require a formal submission to the IRS, while others can be self-corrected by the plan sponsor without the need for IRS approval.
The correction programs and options that make up EPCRS have, until now, been established exclusively in a series of IRS notices and revenue procedures dating back more than 30 years. However, as part of the SECURE 2.0 Act (Act), Congress took it upon itself to radically expand EPCRS to allow employers to self-correct most inadvertent failures to comply with the tax-qualification rules under the Internal Revenue Code (Code). This represents a dramatic change in how the availability of corrections has been legislated in the past. However, at its core, the Act’s EPCRS-related pronouncements reinforce the decades-long push to encourage plan sponsors to timely identify and promptly resolve plan errors.
This Special Report discusses the history behind the creation of EPCRS, outlines some of its key features, and highlights how the growth and expansion of this program—including, most recently, under the Act—continues to improve IRS enforcement of tax-qualified plan rules by encouraging plan sponsors to establish practices and procedures designed to ensure compliance, thereby avoiding the harsh tax penalties of plan disqualification.