Updated EPCRS Rev. 08/22/08, E-mail Alert 2008-11

The IRS Employee Plans Compliance Resolution System (EPCRS) is issued in Revenue Procedure format. It is updated every couple of years with IRS adding more correction procedures while streamlining the compliance process. EPCRS contains the three IRS correction programs for employer retirement plans. The three programs are the self-correction program or SCP, the voluntary compliance program or VCP and the Audit Closing Agreement Program (Audit Cap). One of the major goals of this revision is to streamline, simplify and expedite the process for a number of common errors.

Effective Date and Effected Procedures
The new EPCRS is Revenue Procedure 2008-50 and is generally effective January 1, 2009. However, plan sponsors are permitted to use Rev. Proc. 2008-50 as of September 2, 2008.

Rev. Proc. 2006-27 is modified and superseded by the new EPCRS. Also, section 3 of Rev . Proc. 2007-49 is modified and superseded.

Increased Size of EPCRS
EPCRS increased from 116 pages to 179 pages. The most notable reason for the growth is the eight additional schedules added to Appendix F. The new schedules account for 51 of the additional 63 pages in the procedure. These schedules streamline the VCP compliance submission process, providing standard compliance language and fill in the blank format for explaining the issues for the particular correction listed on the applicable schedule. The schedules contain more than one correction and compliance language, so these should be very helpful.

Check out the schedules in EPCRS Appendix F:
Schedule 1 Interim and Certain Discretionary Amendment Failures, Pages 135 - 138
Schedule 2 Nonamender Failures (other than those for Schedule 1), Pages 139 - 140
Schedule 3 SEPs and SARSEPs, Pages 141 - 151
Schedule 4 SIMPLE IRAs, Pages 152 - 160
Schedule 5 Plan Loan Failures, Pages 161 - 167
Schedule 6 Employer Eligibility Failures [401(k) and 403(b)], Pages 168 - 169
Schedule 7 Failure to Distribute Excess Deferrals, Pages 170 - 171
Schedule 8 Failure to Timely Pay RMD, Pages 172 - 173
Schedule 9 Correction by Plan Amendment (Per Appendix B), Pages 174 - 179

Changes in EPCRS and Links to EPCRS Information

• EPCRS Program modification effects are summarized on pages 8 – 10.
  
• There is a summary of EPCRS changes IRS pdf.
  
• There is a topical index list to EPCRS pdf.
  
• The IRS EPN announcement also contains links and an overview of changes.
  
• There is an IRS request for comments on a number of future enhancements that the IRS is considering for the next EPCRS. The subjects are on pages 11-12.

Use of the DOL’s VFCP online calculator was addressed. It may be used but only as defined in EPCRS on pages 28-29 as follows:

“(a) Reasonable estimates. If either (i) it is possible to make a precise calculation but the probable difference between the approximate and the precise restoration of a participant's benefits is insignificant and the administrative cost of determining precise restoration would significantly exceed the probable difference or (ii) it is not possible to make a precise calculation (for example, where it is impossible to provide plan data), reasonable estimates may be used in calculating appropriate correction. If it is not feasible to make a reasonable estimate of what the actual investment results would have been, a reasonable interest rate may be used. For this purpose, the interest rate used by the Department of Labor’s Voluntary Fiduciary Correction Program Online Calculator (“VFCP Online Calculator”) is deemed to be a reasonable interest rate. The VFCP Online Calculator can be found on the web at http://www.dol.gov/ebsa/calculator.”

Bill Grossman, QPA