Plans, Perks & Pay | Employee Benefits & Executive Compensation Blog

The Internal Revenue Service has updated the Employee Plans Compliance Resolution System (EPCRS) to allow for the self-correction of more failures. EPCRS is a program that allows plan sponsors to correct errors involving qualified plans (such as 401(k) plans, profit sharing plans, defined benefit pension plans, etc.) and certain other types of plans that, if left uncorrected, could jeopardize the tax-favored status of the plan. Revenue Procedure 2019-19 expands the self-correction program to include correction of certain loan failures and more corrections via retroactive amendment.

In October 2018, the IRS updated the Employee Compliance Plans Resolution System (EPCRS) by issuing Rev. Proc. 2018-52. EPCRS is a program that allows plan sponsors to correct errors involving qualified plans (such as 401(k) plans, profit sharing plans, defined benefit pension plans, etc.) and certain other types of plans that, if left uncorrected, could jeopardize the tax-favored status of the plan. Among other changes to EPCRS, Rev. Proc. 2018-52 provides that, beginning Jan. 1, 2019, Voluntary Correction Program (VCP) submissions may be made electronically via www.pay.gov. Beginning April 1, 2019, the electronic filing requirement becomes mandatory.

Employee benefit plans and executive compensation arrangements are subject to a staggering amount of regulation. The laws, regulations and other guidance regarding these plans and arrangements are complex and often confusing. Audits and enforcement actions by governmental agencies against plan sponsors and fiduciaries — as well as class-action lawsuits by plan participants — have become increasingly common in recent years.