IRS Revises EPCRS Guidance, Expands Corrections Available Under Self-Correction Program

On April 19, 2019, the Internal Revenue Service (“IRS”) issued Revenue Procedure (“Rev. Proc.”) 2019-19 –the most recent comprehensive official guidance to the IRS’s Employee Plans Compliance Resolution System (“EPCRS”). EPCRS generally permits 401(k) plan sponsors to correct certain operational and other plan mistakes or failures, thereby continuing to provide employees with retirement benefits on a tax-favored basis, as opposed to risking plan disqualification or incurring fines or other sanctions.

Among other things, the new Rev. Proc. substantially increases the scope of corrections under the Self-Correction Program (“SCP”), instead of the Voluntary Correction Program (“VCP”) or Audit Closing Agreement Program (“Audit CAP”) under EPCRS.  For example, corrections made under SCP do not require advance IRS approval or payment of a user fee, unlike corrections made under VCP or Audit CAP.

Rev. Proc. 2019-19 supersedes the previous official EPCRS guidance, Rev. Proc. 2018-52. The IRS has summarized these changes, including a user-friendly summary chart that should prove helpful to both 401(k) plan administrators and ERISA practitioners. The new guidance is effective as of the date of publication –April 19, 2019.

Expanded Corrections Under SCP.

In general, assuming all relevant SCP criteria are met, the new Rev. Proc. expands SCP to permit correction of the following failures:

  • Plan document failures.For the first time, SCP may be used to correct certain plan document failures. This relief is only available if:
    • Correction is completed on or before the last day of the relevant correction period (generally, the last day of the second plan year following the plan year for which the failure occurred), assuming the failure is deemed “significant” under SCP; and
    • The plan has a favorable determination letter.

Consistent with past guidance, SCP cannot be used to correct a failure to initially adopt a new plan document, or to timely adopt a discretionary amendment (for example, an amendment intended solely to add a desired 401(k) plan design feature, such as hardship withdrawals).

  • Correction of additional operational failures by plan amendment.The Rev. Proc. expands the scope of operational failures that may be corrected by means of adopting plan amendments under SCP. (Previously, SCP relief was available for a more limited number of operational failures.)  The additional categories of operational failures may only be corrected by means of SCP if:
    • The pertinent plan amendment results in an increase in a benefit, right, or feature;
    • The underlying failure did not provide increased benefits, or greater increases, for only a particular class or subset of eligible employees;
    • The resulting increase in a benefit, right, or feature applies to all employees eligible to participate in the plan; and
    • The increase is otherwise permissible under the Internal Revenue Code, and satisfies all applicable EPCRS correction principles and related rules.
  • Certain plan loan failures. The new Rev. Proc. also makes the following changes with respect to corrections involving plan loan failures:
    • Generally, SCP may now be used to correct plan loan defaults using the methods that were previously available only under VCP;
    • Certain failures to obtain spousal consent for loans required by the terms of the plan may be corrected under SCP by notifying the participant and spouse, and obtaining consent retroactively;
    • Violations of plan-imposed limits on the number of plan loans that may be outstanding at any given time generally may now be corrected under SCP by means of a retroactive plan amendment; and
    • SCP generally may be used to delay reporting of certain deemed distributions on default of a plan loan until the year in which correction is made (although SCP cannot be used to prevent the related taxable distribution itself).
  • Certain Spousal consents.Failures to obtain spousal consent for distributions other than plan loans generally may now be corrected by using either one of two prescribed methods that were previously available only under the VCP component of EPCRS.

Electronic VCP Filing Now Mandatory. 

In another new development, the new Rev. Proc. specifies that all VCP submissions must be made electronically in accordance with the guidance, beginning as of April 1, 2019. In fact, the IRS warns that any paper VCP submissions postmarked after March 31, 2019, will be returned to the applicant.


The significant reductions in staffing and funding of the IRS may be at least partially responsible for the push towards increased self-correction methods.  Additionally, expanding the scope of self-corrective mechanisms seems consistent with the IRS’s original goal in establishing EPCRS, which was to encourage 401(k) plan administrators to proactively seek out and correct operational errors before being “caught” by the IRS on audit or otherwise. Self-correction is the least onerous available correction method, so its expanded availability should, in theory, lead to increased operational compliance with the law.

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The information and content contained in this blog post are for general informational purposes only, and does not, and is not intended to, constitute legal advice. Specific questions about corrections under SCP or any other component of EPCRS should be directed to your ERISA counsel or other professional benefits advisors.

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