IRS updates EPCRS, making significant changes


The IRS recently released updates (Rev. Proc. 2021-30) to the Employee Plans Compliance Resolution System (EPCRS)—the formal correction program for plan sponsors to correct certain qualified retirement plan failures and other tax-favored retirement plan failures.

The EPCRS enables plan sponsors to correct certain plan failures through self-correction (SCP), voluntary correction with IRS approval (VCP) and correction on audit (Audit CAP). The appropriate correction procedures are dependent on the type of plan failure. The plan failures that may be corrected include plan document failures, operational failures, demographic failures and employer eligibility failures.

Rev. Proc. 2021-30 modifies and supersedes Rev. Proc. 2019-19, the most recent prior consolidated statement of the correction programs under EPCRS. Generally effective July 16, 2021, the changes made to EPCRS by Rev. Proc. 2021-30 include:

  • Expanding correction principles to allow plan sponsors to fix operational failures when plan participants or beneficiaries receive payments from defined benefit plans that exceed what is permitted by the terms of the plan. The new principles reduce the need to seek repayment from participants or beneficiaries who received overpayments, and in some cases, do not require the plan sponsor to reimburse the plan for overpayments to participants.
  • Extending the correction period of significant operational failures under SCP from two to three years.
  • Making it easier to use retroactive plan amendments to correct operational failures under SCP by removing the requirement that all participants in the plan benefit by the retroactive amendment.
  • Increasing from $100 to $250 the threshold for certain de minimis amounts for which a plan sponsor is not required to implement correction.

In addition, effective Jan. 1, 2022, Rev. Proc. 2021-30 eliminates anonymous submissions under VCP, but essentially replaces these submissions with a less formal process by allowing plan sponsors or their representatives to make an anonymous written request for a pre-submission conference to discuss a potential VCP submission at no cost to the plan sponsor.



Tax professional standards statement

This content supports Grant Thornton LLP’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the topics presented herein, we encourage you to contact us or an independent tax professional to discuss their potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this content may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this content is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.

The information contained herein is general in nature and is based on authorities that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice provided by Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, the reader’s specific circumstances or needs and may require consideration of tax and nontax factors not described herein. Contact Grant Thornton LLP or other tax professionals prior to taking any action based upon this information. Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Grant Thornton LLP assumes no obligation to inform the reader of any such changes. All references to “Section,” “Sec.,” or “§” refer to the Internal Revenue Code of 1986, as amended.


More tax insights