November 23, 2014
November 22, 2014
November 21, 2014
It Just Got Easier to Fix Your Ailing Retirement Plan
Properly maintaining and administering a retirement plan is a difficult task for most employers. Despite even extreme vigilance, things often go wrong. The list of potential plan errors is endless, and plan sponsors face very hefty penalties if those errors are discovered during an IRS audit. The good news is that plan sponsors may avoid those penalties by voluntarily correcting errors through the Employee Plans Compliance Resolution System (EPCRS). And, even better, EPCRS just got broader, easier, and cheaper.
- Broader: EPCRS was recently broadened for non-profit and governmental employers that sponsor Code Section 403(b) plans. Sponsors of these plans may now correct a broader range of errors, including, for the first time, errors relating to the timing of amendments. Additionally, EPCRS has been expanded on a trial basis for governmental entities that sponsor Code Section 457(b) plans.
- Easier: The new iteration of EPCRS provides additional correction options and examples, clarifies the requirements for certain corrections, and overhauls the old submission forms. All of these improvements make it easier to determine the appropriate correction and will reduce the time required to complete a submission.
- Cheaper: Some errors, such as missing the deadline to adopt an amendment, require the plan sponsor to pay a fee to correct the error. The updated EPCRS lowers the fee for certain corrections, and, most notably, provides a temporary 50% fee reduction for Code Section 403(b) plans that were not updated in 2009 to reflect new regulations. Sponsors of these Code Section 403(b) plans must file an EPCRS submission by December 31, 2013 to take advantage of the reduced fee.
Correcting plan errors through EPCRS normally will be much cheaper than paying the penalty assessed for errors discovered during an IRS audit. Therefore, it is in an employer’s best interest to carefully and routinely monitor its plan for errors and, when errors are discovered, to promptly correct those errors through the new and improved EPCRS.