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Voluntary Correction Programs

IRS Eases Correction Rules for Missed Elective Deferrals

The IRS has just given sponsors of 401(k) and 403(b) plans a number of additional options for correcting a failure to honor an employee’s election to defer a portion of his or her pay. These new options, as announced in Revenue Procedure 2015-28, will be particularly helpful to sponsors of plans that provide for automatic enrollment (including those with an automatic escalation feature).

Additional Action Required by Late Filers of Form 5500 (Even Those That Have Already Filed)

Plan administrators who fail to timely file Form 5500 annual reports for their retirement plans may be subject to penalties under both ERISA and the Tax Code. Under previous guidance from the IRS, correcting such a late filing under the Department of Labor’s Delinquent Filer Voluntary Compliance (“DFVC”) Program could relieve the filer from penalties assessed by both the Department of Labor (“DOL”) and the Internal Revenue Service (“IRS”). However, under new guidance from the IRS, relief from its penalties now depends on a separate filing. Moreover, this new IRS requirement will apply retroactively to DFVC Program filings made since 2009.

EPCRS Now Covers Common 403(b) Compliance Issues

Recent updates to the IRS’s Employee Plans Compliance Resolution System (“EPCRS”) will allow tax-exempt organizations and public schools that sponsor Section 403(b) retirement plans to correct additional compliance problems under those plans.  These changes, as reflected in Revenue Procedure 2013-12, are generally effective for corrections or submissions made on or after April 1, 2013, although they may also be applied immediately.


For the first time since 2008, the IRS has updated the Employee Plans Compliance Resolution System (“EPCRS”). This article summarizes the most significant changes in Revenue Procedure 2013-12 that apply to qualified retirement plans.

Year-End Amendment Deadline Under Code Section 409A

Recent IRS guidance makes clear that deferred compensation arrangements under which payments are conditioned on the execution of a release of claims could pose a problem under Section 409A of the Internal Revenue Code.  Fortunately, the IRS has also announced a voluntary correction program under which this Section 409A violation may be corrected.  Employers wishing to take advantage of this correction program must act quickly, however, because this aspect of the program expires at the end of 2012.

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