IRS Updates Retirement Plan Correction Program

October 8, 2018

The Internal Revenue Service recently issued Revenue Procedure 2018-52 (the 2018 RP) to provide revised procedures for its Employee Plans Compliance Resolution System (EPCRS) — the system through which plan sponsors can correct errors in the form and operation of certain retirement plans intended to satisfy the requirements of Sections 401(a), 403(a), 403(b), 408(k) or 408(p) of the Internal Revenue Code. Unless properly corrected, such errors may result in the loss of a retirement plan’s favored tax status under the code.

The 2018 RP continues a trend of supplementing existing EPCRS relief and streamlining its corrections procedures. The 2018 RP modifies and supersedes the consolidated statement of EPCRS issued in Revenue Procedure 2016-51, primarily to set forth new submission procedures for the EPCRS Voluntary Correction Program (VCP).

The 2018 RP is generally effective Jan. 1, 2019. However, certain new electronic submission procedure requirements for VCP submissions do not become effective until April 1, 2019. Below are an overview of EPCRS and highlights of significant changes made by the 2018 RP.

EPCRS Programs

The EPCRS comprises three programs:

  • Self-Correction Program (SCP)

SCP is a means of correcting a retirement plan’s operational failures without involving the IRS. To use SCP, an employer must correct the failure in a prescribed manner and then document the correction in a detailed memorandum. Failures that can be corrected by SCP are divided into “insignificant” failures, which can be corrected at any time, and “significant” failures, which must be corrected within a certain time period, generally by the last day of the second plan year following the plan year in which the failure occurred.

  • Voluntary Correction Program (VCP)

VCP requires filing an application and paying a fee to seek IRS approval of the correction. The advantage of VCP is that it can be used to correct a broader range of failures than SCP can resolve, including plan document problems and “significant” failures not corrected within SCP’s required time period. Earlier this year, the IRS modified the user fee structure for most VCP submissions. For more information on these changes, see McGuireWoods’ Jan. 22 legal alert, “IRS Announces Changes to Voluntary Correction Program Fees.”

  • Audit Closing Agreement Program (Audit CAP)

Unlike SCP and VCP, Audit CAP is initiated by the IRS and applies to plans under examination. Audit CAP involves taking IRS-approved corrective actions, paying a negotiated penalty and entering into a closing agreement with the IRS.

Regardless of which program applies, EPCRS generally requires full correction of the failure, which means the impact participants and the plan must be made whole.

Beginning April 1, Submit All VCP Filings Electronically

Effective April 1, 2019, all VCP submissions must be submitted electronically at Specifically, applicants will be required to establish an account with the website and upload required documentation in a single PDF, subject to a 15 MB limit; documentation in excess of this limit must be faxed. Applicants must pay any applicable user fees through Instead of receiving acknowledgement letters confirming receipt of submitted applications, each applicant will receive a unique Tracking ID that will serve as the IRS control number for the application. The IRS may issue a compliance statement without contacting the plan sponsor or its authorized representative. Until April 1, applicants may continue to submit VCP filings via paper. The 2018 RP cautions, however, that paper submissions postmarked after March 31, 2019, will be returned.           

Future Guidance on Overpayments and SCP

The 2018 RP states that the IRS is reviewing comments on potential future changes to EPCRS relating to the correction of overpayments and the extension of SCP.

For more information, please contact one of the authors of this alert or any member of the McGuireWoods employee benefits practice.