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Employee Plans Compliance Resolution System (EPCRS)

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IRS Overhauls the Retirement Plan Correction Program

October 20, 2016

Authors

Katharine Finley and benefitsbclp

IRS Overhauls the Retirement Plan Correction Program

October 20, 2016

by: Katharine Finley and benefitsbclp

old-way-new-wayWith the looming end of the determination letter program as we know it, the IRS has issued an updated Revenue Procedure for the Employee Plans Compliance Resolutions System (EPCRS). Released on September 29, 2016, Rev. Proc. 2016-51 updates the EPCRS procedures, replaces Rev. Proc. 2013-12 and integrates the changes provided in Rev. Proc. 2015-27 and Rev. Proc. 2015-28. The updated revenue procedure is effective January 1, 2017 and its provisions cannot be used until that date. Rev. Proc. 2013-12, as modified by Rev. Proc. 2015-27 and Rev. Proc. 2015-28, should be used for any corrections under the EPCRS for the remainder of 2016. Highlights from the new revenue procedure are outlined below.

Changes

  • Determination Letter Applications. Determination letter applications are no longer
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Do You Know Where Your Participants Are?

March 14, 2016

Authors

Brian Berglund

Do You Know Where Your Participants Are?

March 14, 2016

by: Brian Berglund

Missing ParticipantThe Department of Labor (“DOL”) has recently implemented an initiative to investigate the manner in which defined benefit plans of large employers comply with the required minimum distribution rules set forth in Section 401(a)(9) of the Internal Revenue Code (“Code”). The initiative is focused on the extent to which large employers have processes in place to (i) locate missing plan participants, (ii) inform deferred vested participants that a benefit is payable, and (iii) commence benefit payments in a timely fashion by each participant’s “required beginning date” (generally, the April 1 following the later of the calendar year in which the participant reaches age 70½ or the calendar year in which the participant terminates employment).

In light of the DOL’s audit

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Changes to User Fees for Voluntary Correction Program (VCP) Submissions

January 8, 2016

Authors

Katharine Finley and benefitsbclp

Changes to User Fees for Voluntary Correction Program (VCP) Submissions

January 8, 2016

by: Katharine Finley and benefitsbclp

On January 4, 2016, the Internal Revenue Service published its annual update of user fees Rev. Proc. 2016-8 for various letter ruling and determination letter requests. The 2016 update now includes user fees and guidance for Voluntary Correction Program (VCP) submissions under the Employee Plans Compliance Resolution System. In many cases the user fee for VCP submissions is reduced under Revenue Procedure 2016-8. The revised fee schedule for employee plan user fees (including VCP submissions) is effective February 1, 2016.

Below are the current user fees for regular VCP submissions for qualified plans and 403(b) plans as set forth in Section 12.02 of Revenue Procedure 2013-12.*

Participants Revenue Procedure 2013-12 Fee 20 or fewer participants $750 21 to 50 participants $1,000 51 to 100 participants $2,500 101 to 500 participants $5,000 501 to 1,000 participants $8,000 1,001 to 5,000 participants $15,000 5,001 to 10,000 participants $20,000

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Overpayments to Participants

July 8, 2015

Authors

Richard Arenburg

Overpayments to Participants

July 8, 2015

by: Richard Arenburg

Hand Over the MoneyThe IRS has clarified its correction guidance recently to say that errors made in overpaying participants for their benefits can be cured by employer make-up contributions, rather than by pursuing participants and beneficiaries for the overpayments they have received. In issuing this clarification, the IRS has aligned itself with the views of the Department of Labor, which has issued advisory opinions that date back to the 1970s that essentially take the same position.

This avenue of correction is particularly welcome given the apparent reluctance of at least some courts to require repayments by overpaid participants. A federal district court recently allowed a participant to use equitable estoppel as a basis to prevent a pension plan from

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IRS issues updates to the Retirement Plan Correction Program

April 15, 2015

Authors

benefitsbclp

IRS issues updates to the Retirement Plan Correction Program

April 15, 2015

by: benefitsbclp

In response to comments from the employee benefits community, the IRS has issued two updates in quick succession for the Employee Plans Compliance Resolution System (EPCRS). The new procedures – Rev. Proc. 2015-27 and Rev. Proc. 2015-28 – do not replace, but provide modifications and clarifications to Rev. Proc. 2013-12.

Rev. Proc. 2015-27

Issued on March 27, 2015, Rev. Proc. 2015-27 clarifies the methods that may be used to correct overpayment failures and makes changes to various provisions of Rev. Proc. 2013-12. For overpayment failure corrections, plan sponsors are no longer required to only recoup large overpayments from plan participants and beneficiaries, but may explore alternative methods of correction. A brief summary of the Rev. Proc. 2015-27 modifications is available here. The modifications are effective July 1, 2015, but plan sponsors may apply these provisions beginning on March 27, 2015.

The IRS

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Correcting 401(k) Plan Loans Under EPCRS

July 2, 2013

Authors

Denise Erwin and Chris Rylands

Correcting 401(k) Plan Loans Under EPCRS

July 2, 2013

by: Denise Erwin and Chris Rylands

Participant loans from 401(k) plans must satisfy certain rules under section 72(p) of the Internal Revenue Code (the “Code”) to prevent the loan from being treated as a taxable distribution (sometimes called a “deemed distribution”).  The amount of the loan generally cannot exceed 50% of the participant’s vested account balance up to a maximum of $50,000 (with reductions for certain previous outstanding loans), the participant must be required to make level amortized payments at least quarterly, and the loan term may not exceed five years from the date the loan is funded unless the participant uses the loan to purchase his or her primary residence (in which case a longer period from the date of funding is allowed).

It is not uncommon for plan sponsors to discover that one or more of these rules have not been followed in administering the plan.  Failures to follow the terms of

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IRS Updates Retirement Plan Correction Program

January 14, 2013

Authors

benefitsbclp

IRS Updates Retirement Plan Correction Program

January 14, 2013

by: benefitsbclp

After a long wait, an updated Revenue Procedure for the Employee Plans Compliance Resolution System (EPCRS) was released in the form of Rev. Proc. 2013-12.  The new Revenue Procedure makes some important changes to the EPCRS.

As many plan sponsors know, the EPCRS includes the self-correction program (SCP), which requires prescribed corrections but does not require submission to the IRS; the voluntary correction program (VCP), which requires both prescribed corrections and submission to and approval by the IRS; and correction of problems discovered on audit (Audit CAP).

The purpose of the updated Revenue Procedure is to improve some features of the EPCRS and clarify others, based in large part on comments from the employee benefits community.  The IRS expects to make more changes of this type in the future, also based on comments from the employee benefits community.  Generally speaking, the IRS was responsive to many of the

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