On December 31, 2012, the IRS released Revenue Procedure 2013-12, its latest iteration of the Employee Plans Compliance Resolution System (EPCRS). EPCRS is a collection of IRS approved programs available to correct certain qualified plan errors or defects. The most recent EPCRS guidance had been issued in 2008, and the significant changes to the programs include the availability for corrections to 403(b) plan and revised submission procedures under the Voluntary Correction Program (VCP).
Although the new guidance became available for plan sponsors and practitioners to use beginning January 1, 2013, it became mandatory to follow as of April 1, 2013. So far, in this author's experience, the changes are primarily form over substance. In fact, the issues available for correction under EPCRS remain largely the same and most clients – except those few that have been down the correction road before – will not notice a difference. This is especially true because the fee structure, based on the number of participants in the qualified plan with the failure, has not changed since 2008. Aside from the new submission procedures under VCP, the new guidance accounts for certain changes since 2008, including the fact that the IRS eliminated the IRS Letter Forwarding Program in August 2012. The Letter Forwarding Program had been a useful tool (not to mention, IRS approved) to locate lost participants who were affected by qualified plan failures. Contacting all affected participants is a critical element of EPRCRS and can often be a time consuming and costly process for plan sponsors. The new guidance acknowledges the elimination of the Letter Forwarding Program and provides that reasonable actions must be taken to locate lost participants, including, but not limited to: (i) mailing to the individual's last known address via certified mail; and (ii) using other locator services such as the Social Security letter forwarding program.
If you are aware of operational or document failures related to your qualified retirement plan, it is strongly recommended that you take a proactive approach to correcting such failures by contacting your professional retirement plan advisors. By being proactive, plan sponsors can help preserve the tax qualified status of their plan. That approach will often – but not always – include voluntarily going to the IRS to get its approval through VCP. Nothing in the new guidance, or its application in its first few months, suggests that using EPCRS is any less attractive for plan sponsors as it had recently been.
Originally published in For Your Benefit
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