EPCRS and SECURE 2.0 Plan Corrections

A1.The three correction programs

Part 21, ch. 1, § A1

EPCRS comprises three programs: (1) the Self-Correction Program (SCP) — fix the failure without contacting the IRS, no fee; (2) the Voluntary Correction Program (VCP) — a filed submission with a user fee that yields an IRS compliance statement; and (3) the Audit Closing Agreement Program (Audit CAP) — resolution by closing agreement and a negotiated sanction when the failure is found on examination. Rev. Proc. 2021-30, §§4.01, 10–14; as expanded by SECURE 2.0 §305.

A2.The failure taxonomy

Part 21, ch. 1, § A2

EPCRS classifies failures as: operational (failure to follow plan terms); plan document (a provision that violates the Code, including late restatements/nonamenders); demographic (a §401(a)(4), §410(b), or §401(a)(26) coverage/nondiscrimination failure); and employer eligibility (an entity that cannot maintain the plan type, e.g., an ineligible 403(b) or 401(k) sponsor). Rev. Proc. 2021-30, §5.01.

A3.What EPCRS does NOT reach (scope limits — screen every matter)

Part 21, ch. 1, § A3

• §409A nonqualified deferred compensation is outside EPCRS — operational failures correct under Notice 2008-113, document failures under Notice 2010-6 (as modified by Notice 2010-80), and relief under Notice 2008-113 §§V–VIII and Notice 2010-6 §§V–XI is generally unavailable while the relevant federal tax return is under examination (for Notice 2008-113, the service provider's return for the failure year; for Notice 2010-6, the service provider's or service recipient's return, with respect to NQDC); Notice 2008-113 §IV same-year corrections are not subject to that bar, but a taxpayer relying on §IV must notify the examining agent. IRS guidance. This is the single most common cross-over error; see Part 18 (Nonqualified Deferred Compensation, 409A, 457, and Executive Compensation) for §409A and keep the tracks separate.
• §457(b) plans are not covered by EPCRS by its terms (the IRS accepts provisional VCP-style submissions for §457(b) plans outside EPCRS, under standards similar to VCP and filed through Pay.gov, generally limited to governmental 457(b) plans; for a tax-exempt employer's top-hat 457(b) the IRS generally will not enter an agreement, except in narrow cases such as a plan erroneously set up for non-HCEs and operated like a qualified plan), and §457(f) has no comprehensive correction program — a real risk in tax-exempt engagements. Rev. Proc. 2021-30, §4.09; Practitioner consensus.
• ERISA Title I fiduciary breaches (late deposits, prohibited transactions) correct through the DOL's VFCP (DFVCP covers only any related late Form 5500, not the breach itself), not EPCRS, even where the same facts also create a qualification failure — run both tracks (Part G).
• IRA corrections under the §305(c) expansion are not yet available pending the rewrite. IRS Notice — interim: Notice 2023-43 Q&A-12.

A4.Effect of correction

Part 21, ch. 1, § A4

A plan corrected under EPCRS is treated as satisfying the qualification (or §403(b)) requirements, so the favorable tax treatment of the plan and participants is preserved and disqualification is avoided. Rev. Proc. 2021-30, §3, §6.02.