Updated EPCRS, Perhaps Soon
Rev. 07/24/08, E-mail Alert 2008-10

New EPCRS Guidance With Numerous Changes
The IRS Employee Plans Compliance Resolutions 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. The current version is Rev. Proc 2006-27. At a recent conference, an IRS representative stated that they are very close to issuing an updated version. One of the major goals of this revision is to streamline, simplify and expedite the process for a number of common errors. A number of new correction procedures to be expected include:

Appendix F additions. VCP submission sample concerning interim good-faith nonamenders expanded. The new procedure will have sample compliance statement submissions for a variety of items in addition to non-amendment issues for qualified plans. The simplified procedures will now address issues such as some plan loan failures, early inclusion of an employee, hardship distributions, participant loans being made without the appropriate provisions being in the plan document and compensation cap failures. In addition many SEP and SIMPLE IRA issues will be addressed.

Remedial Amendment Cycles. The staggered remedial amendment cycle in Rev. Proc. 2007-44 will be reflected in the new EPCRS and when determination letter is needed.

DOL On-line Calculator and EPCRS. IRS and DOL have different methods for calculating lost earnings for issues such as late deposits of plan contributions. Many practitioners would find it easier to use the DOL’s on-line calculator rather than doing one of the several calculation options described in EPCRS. The IRS will address when the DOL’s online calculator for VFCP corrections may be used for an EPCRS correction.

Note: The release had been expected earlier, but has apparently held up by consideration of program expansions recommended under the Pension Protection Act of 2006 (PPA).