Effect on programs. This revenue procedure modifies and supersedes Rev. Proc. 2002-47, 2002-29 I.R.B. 133, which was the prior consolidated statement of the correction programs under EPCRS. A number of changes have been made to simplify EPCRS and increase uniformity in the administration process and fee structure. The modifications to Rev. Proc. 2002-47 that are reflected in this revenue procedure include: • consolidating all voluntary correction procedures into a single voluntary correction program (VCP) (sections 4.01(2), 10) • providing a fixed fee schedule for all VCP submissions (section 12) • eliminating the Voluntary Correction of Operational Failures Standardized procedure (VCS) (section 10) • providing for a single time for payment of compliance fees for most VCP submissions (sections 11.04, 11.05) • expanding EPCRS to SIMPLE IRA Plans (section 4.01) • adding correction methods and reporting instructions for SEPs and SIMPLE IRA Plans (section 6.10) • simplifying the Group Submission procedure by eliminating the POA requirement and revising the Group Submission compliance fee (sections 10.12(3)(b), 12.04) • eliminating the requirement that VCP compliance fees be submitted by certified or cashier’s check (sections 10.06, 11.05 and 12.01) • expanding the Anonymous and Group Submission procedures to all submissions under VCP including SEPs and SIMPLE IRA Plans (section 10.11, 10.12) • providing rules relating to reporting plan loan failures (section 6.07) • providing guidance for EGTRRA nonamenders (section 4.10) • expanding the definition of Overpayment (section 5.01(6)) • clarifying the special exception to full correction for imprecise or unavailable data (section 6.02(5)(a)) • adding a correction method for a failure to obtain spousal consent (section 6.04) • clarifying that the correction of failures in a terminated plan may be made under VCP whether or not the trust is in existence (section 10.03) • updating the definition of Favorable Letter (section 5.01(4)) • revising the Form 5500 information required for VCP submissions (section 11.03) • extending correction methods in Appendix A and Appendix B to 403(b) Plans, SEPs and SIMPLE IRA Plans (Appendix A, section .01 and Appendix B, section 1.01) • expanding the correction method for early inclusion of an otherwise eligible employee to include improper inclusion due to the application of an incorrect entry date (Appendix B, section .07(3)) • eliminating the factor under Audit CAP that referred to the VCP fees to emp...
Effect on programs. This revenue procedure modifies and supersedes Rev. Proc. 2003-44, 2003-1 C.B. 1051, which was the prior consolidated statement of the correction programs under EPCRS. The modifications to Rev. Proc. 2003-44 that are reflected in this revenue procedure include: • providing that if the Plan Sponsor corrects the failures in accordance with the requirements of this revenue procedure, the plan will be treated as satisfying § 401(a), § 403(b), § 408(k), or § 408(p), as applicable, for purposes of applying § 3121(a)(5) (FICA taxes) and § 3306(b)(5) (FUTA taxes) (section 3.01) • revising the requirements for submitting a determination letter application when correcting certain Qualification Failures by plan amendment (sections 4.06, 10.08, and 11.03(3)) • clarifying that an egregious failure includes providing more favorable benefits to an owner based on a purported collective bargaining agreement where there has in fact been no good faith bargaining (section 4.11) • providing rules relating to the availability of programs under EPCRS in cases where the plan or plan sponsor is a party to an abusive tax avoidance transaction (sections 4.13 and 11.02(11)) • updating the definition of Favorable Letter (section 5.01(4)) • revising provisions affecting 403(b) plans by revising the definition of Excess Amounts (section 5.02(3)) • updating the definition of Under Examination (section 5.03) • expanding VC and Audit CAP to terminating Orphan Plans and, with respect to those plans, providing for a possible exception to the requirement for full correction and a waiver of the VCP fee in appropriate circumstances (sections 5.06, 6.02(5)(f), and 12.02(3)) • adding a correction method for certain plan loan failures (sections 6.02(6) and 6.07), including adding a correction method for a plan that permits plan loans operationally but does not have the appropriate plan loan language (Appendix B 2.07(2)) • revising the correction method for a failure to include an eligible employee in a cash or deferred arrangement under § 401(k) (section 6.02(7), Appendix A .05, and Appendix B 2.02) • adding an alternative correction method for a failure to obtain spousal consent (section 6.04(2)(c)) • revising provisions affecting 403(b) plans by eliminating the term Total Sanction Amount and replacing it with the term “Maximum Payment Amount” and eliminating correction by retention of Excess Amounts (sections 5.02(4) and 6.06(2)) • providing that as part of both VCP and Audit CAP, if the failure...
Effect on programs. This revenue procedure affects the programs as fol- lows: • consolidates and coordinates guid- ance issued in 1998 and 1999 into a unified EPCRS procedure; • clarifies the application of FICA and FUTA taxes (and corresponding withholding obligations) to cor- rected Qualified Plans and 403(b) Plans; and • clarifies that the statute of limita- tions for purposes of redetermining taxes for a closed taxable year will not be reopened solely because of correction of a failure that occurred in such year.
Effect on programs. This revenue procedure modifies and supersedes Rev. Proc. 2000-16, 2000-6 I.R.B. 518, which was the prior consolidated statement of the correction programs under EPCRS. Many of the modifications have been made in response to public comments, and further changes are expected to be made in the future in response to comments previously received. The modifications to Rev. Proc. 2000- 16 that are reflected in this revenue procedure include: • combining the prior programs that allow voluntary correction with Service approval – previously VCR, Walk-In CAP, and TVC -- into a single voluntary correction program, called VCP. VCP includes special procedures for certain Operational Failures (VCO and VCS, the successors to VCR and SVP respectively) and for 403(b) Failures (VCT, the successor to TVC), and also includes other new, special procedures described below. • renaming the previous APRSC program the Self-Correction Program (SCP). • broadening the submission procedures under VCP to allow certain organizations, such as master and prototype sponsors or third-party administrators, to receive a compliance statement for correcting failures that affect more than one Plan Sponsor (VCGroup). • revising the submission procedures under VCP to allow Plan Sponsors to submit a request on an anonymous (“Xxxx Xxx”) basis. • expanding EPCRS to add new procedures specially designed for small employers that sponsor SEPs, permitting small employers to self-correct insignificant SEP failures and making special accommodation for SEP sponsors under EPCRS to take into account special circumstances affecting them. • extending the duration of the self-correction period under SCP (the former APRSC) for significant operational compliance failures where the Plan Sponsor accepts a transfer of plan assets or effects a plan merger in connection with a corporate merger, acquisition, or other transaction. • facilitating correction under SCP, VCP, and Audit CAP of previous Qualification Failures by Plan Sponsors that accept transfers of plan assets or effects plan mergers in connection with corporate transactions. • permitting correction through retroactive amendment where employees are permitted to begin participation before they are eligible (see Example 22 in Appendix B). • permitting correction through retroactive amendment under SCP and VCO for failures related to permitting hardship withdrawals, providing benefits based on compensation in excess of the section 401(a)(17) limit, and premature...
