IF YOU OFFER your employees retirement plans, there is new information from the Internal Revenue Service regarding the Employee Plans Compliance Resolution System (EPCRS).
Plan sponsors and professionals can correct certain errors in employee plans, in some cases without notifying the IRS. This allows participants to continue receiving tax-favored retirement benefits and protects the employees' and retirees' benefits, according to the IRS.
There are three levels in EPCRS:
The Self-Correction Program (SCP) permits a plan sponsor to correct insignificant operational failures in plans such as qualified plans, 403(b) plans, SEPs or SIMPLE IRA plans without having to notify the IRS and without paying any fee or sanction.
The Voluntary Correction Program (VCP) allows a plan sponsor, at any time before an audit, to pay a limited fee and receive the IRS' approval for a correction of a qualified plan, a 403(b) plan, SEP or SIMPLE IRA plan.
The Audit Closing Agreement Program (Audit CAP) allows a sponsor to correct a failure or an error that has been identified on an audit and pay a sanction based on the nature, extent and severity of the failure being corrected.
