On December 31, 2012, as Times Square in New York was getting ready to drop the crystal ball, the Internal Revenue Service (IRS) dropped long-awaited guidance regarding retirement plan corrections in the form of Revenue Procedure 2013-12. This Revenue Procedure updates the Employee Plans Compliance Resolution System (EPCRS), which includes the Voluntary Correction Program (VCP), and provides guidance on methods available to sponsors of tax-qualified retirement plans to correct operational and plan document errors in order to preserve a plan’s tax-qualified status. Rev. Proc. 2013-12 provides crucial relief for 403(b) plans and a potpourri of other enhancements and clarifications to EPCRS, which was last revised in Rev. Proc. 2008-50. EPCRS provides three correction programs known as: (1) Self-Correction Program (SCP); (2) VCP; and (3) Correction on Audit Program (Audit CAP).
For many employers that have 403(b) plans and other types of qualified plans, this guidance provides an excellent opportunity to maintain tax-favored benefits from these plans while avoiding substantial penalties that may occur upon future audit.
For more details on these significant changes, read the full article here.
