IRS Updates EPCRS, Changing VCP Submission Procedure IRS Updates EPCRS, Changing VCP Submission Procedure

IRS Updates EPCRS, Changing VCP Submission Procedure

On September 28, 2018, the Internal Revenue Service ("IRS") issued Revenue Procedure 2018-52, which updates the Employee Plans Compliance Resolution System ("EPCRS") effective January 1, 2019. The key change is an electronic submission procedure for EPCRS' Voluntary Correction Program ("VCP"), which becomes mandatory on April 1, 2019. Although long anticipated, the updated Rev. Proc. did not include any new guidance on overpayment corrections, but indicated the IRS is still accepting and reviewing comments on the issue.

EPCRS Correction Programs

EPCRS provides three correction programs for retirement plans that intend to meet the requirements of 401(a), 403(a), 403(b), 408(k) or 408(p) but fail to do so. These correction programs include: self-correction, correction under the VCP, and correction on audit.  By following the appropriate correction program, plans can correct their failures, preserve their qualified status, and continue to provide participants with retirement benefits on a tax-favored basis.

VCP Electronic Submission Procedure

Beginning April 1, 2019, the IRS will accept VCP submissions (including payment of the required fee) only if made electronically at www.pay.gov. The website will be available for optional use from January 1, 2019 through March 31, 2019. 

Revenue Procedure 2018-52 outlines the full procedure for VCP submissions made via www.pay.gov. It indicates filers must prepare all submission documents for electronic upload and pay all user fees electronically. Additionally, the IRS will no longer mail an acknowledgement letter to the applicant upon receipt of submission. Instead, the IRS will acknowledge receipt through a pay.gov Tracking ID it will create for each unique submission. Finally, plan sponsors may designate an authorized representative to file a VCP submission with the IRS using www.pay.gov. (This representative must be specified on a Form 2848, Power of Attorney and Declaration of Representation.)

Overpayment Corrections

The IRS did not issue final guidance on overpayment corrections in Revenue Procedure 2018-52. Instead, the IRS has indicated it is still soliciting comments from the public on expanding EPCRS correction rules to provide additional guidance on the recovery or recoupment of overpayments.

For more information regarding EPCRS and the changes made under Rev. Proc. 2018-52, contact Craig Burke, Sarah Funke, Ian Minkin, Melissa Proffitt, Shalina Schaefer, Marc Sciscoe, Tara Sciscoe, Chris Sears, or the Ice Miller Employee Benefits attorney with whom you work.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.
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