The IRS has a long history of encouraging compliance by sponsors and administrators of qualified benefit plans with the operational and administrative requirements of the Internal Revenue Code. One of its methods of encouragement was its adoption of the Employee Plans Compliance Resolution System (“EPCRS”). EPCRS provides plan sponsors finding themselves in the unfortunate situation of failing to have met the Code's requirements for a period of time with a system of multiple correction programs designed to correct the failure thereby preventing disqualification of the retirement plans and allowing it to maintain its tax-favored treatment under the Code.
Updated guidance under EPCRS was recently issued by the IRS in Rev. Proc. 2016-51 (available here). Most notably, the new Revenue Procedure was modified to take into consideration the recent changes to the IRS's determination letter program announced in Rev. Proc. 2016-37 (available here) eliminating the staggered 5-year remedial amendment cycle system for individually designed plans.
Once an audit or investigation of the plan has commenced, the right to correct an operational or administrative failure with use of EPCRS is lost. Therefore, time is of the essence when submitting an application for correction of the failure using EPCRS. If your plan has failed to follow the operational or administrative requirements set forth in the Code, contact one of our experienced ERISA attorneys who will be able to counsel you on your correction options and guide you through the best correction program for your particular circumstance – thereby allowing the plan to maintain its tax-qualified status. After all, it's why you adopted the plan in the first place!
There are no comments for this post. Be the first and Add your Comment below.
Leave a Comment