EPCRS Correction
Rev. 03/19/10; E-mail Alert 2010-5

Plan sponsors of preapproved defined contribution plans (Master and Prototype and Volume Submitter Plans) will face non-amender penalties if they fail to restate their plan onto an EGTRRA plan document by the April 30, 2010 deadline. The IRS has stated there will be no extension of the April 30th deadline; therefore, it is critical to ensure all preapproved defined contribution plans are timely restated. 

In addition to April 30, 2010 being the deadline for EGTRRA restatements, it is also the cutoff date for existing preapproved EGTRRA defined contribution plans to file for a determination letter (DL) using Form 5307.  It is hoped that at a later date the IRS will address how future DL requests made using a Form 5307 may be made, especially for new plans. 

EPCRS non-amender correction
The IRS’s Employee Plans Compliance Resolution System (EPCRS) Rev. Proc. 2008-50 contains the appropriate correction method for remedying a non-amender failure.  Plan sponsors can voluntarily correct these failures under the Voluntary Correction Program (VCP). Such corrections will require a VCP filing.

Plan sponsors who do not timely restate their plan onto an EGTRRA document will face even greater IRS penalties if the failure is identified on audit, or during a determination letter request. The EPCRS non-amender fee is the normal VCP fee for correcting plan failures and is based on the number of participants in the plan. See the fee chart below.

Note that the fee below is reduced by 50% if the non-amender violation is remedied within the one-year period following the April 30, 2010 deadline (§12.03 of R.P. 2008-50).

Additional Points About VCP Fees

• The Fee Table (§12.02) requires the fee to accompany the VCP submission.
• The filing may be streamlined by using, the Appendix F, non-amender schedules.
• The non-amender penalty is based on the number of participants in the plan.  The number of participants is determined from the most recently filed Form 5500 on line 7f. (§12.07)
• Group submissions based on number of plans. 20 plans is $10,000.00, additional plans are @ $250 each up to maximum of $50,000. (§12.04)

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