EPCRS Non-amender Process
Rev. 10/30/09; E-mail Alert 2009-17

In 2008, the  IRS updated the Employee Plans Compliance Resolution System (EPCRS) (Rev. Proc. 2008-50).  With the establishment of remedial amendment cycles (initially under Rev. Proc. 2005-66 and then updated under Rev. Proc. 2007-44), interim (previously referred to as required) and discretionary amendment rules were formally made part of the on-going restatement procedures.  Rev. Proc. 2008-50 added a category for failure to amend a plan document, reflecting discretionary amendments for law changes that are optional for plans to adopt. 

EPCRS 12.03 VCP for non-amender failures are subject to the normal fee schedule based on the number of participants in the plan for a restatement that was not done during the remedial amendment period. If the restatement is made during the first 12 months after the RAP has passed, the penalty is 50% of the amount on the schedule.

A certain amount of confusion exists about whether certain amendments are interim or discretionary, therefore, the IRS decided to apply the same rules to both categories of amendment failures.  EPCRS gives an employer until the end of the remedial amendment cycle to correct good faith, discretionary, and interim non-amender failures.  Employers can voluntarily correct these failures under the Voluntary Correction Program (VCP), or it can happen as part of the Audit Closing Agreement Program (Audit CAP).  Under VCP, the correction fee is $375 for a plan of any size.  An employer is permitted to correct these types of failures by amending its plan to reflect the actual operation of the plan, rather than having to change its plan operations to reflect what the plan says.

Under EPCRS, there are certain situations that will require employers to submit requests for determination letters in order to correct a failure.  Determination letter requests are not required when employers correct failures to adopt discretionary amendments. A determination letter application will be required if a plan failed to adopt a required amendment.  Failing to amend for GUST or failing to amend during a plan’s assigned remedial amendment cycle will also require the employer to submit a determination letter request when correcting the failures under VCP or Audit CAP. 

Be it for nonamender, document or operational non-compliance issues,
McKay Hochman has extensive experience in filing VCP submissions on
behalf of plan sponsors. If we can help you with a VCP submission, call us
at 973-492-1880 for more information.

Bill Grossman, ERPA, QPA