The IRS released Rev. Proc. 2018-52
to update the Employee Plans Compliance Resolution System (EPCRS), the formal mechanism enabling plan sponsors to correct certain qualified retirement plan failures (and other tax-favored retirement plan failures). Under the EPCRS, there are three ways to make corrections: the Self-Correction Program (SCP), which allows for corrections without IRS approval; a voluntary correction program (VCP), which requires IRS approval; and the Audit Closing Agreement Program (Audit CAP), which permits correction on audit. The appropriate corrective 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. 2018-52 modifies and supersedes Rev. Proc. 2016-51, the most recent consolidated statement of the correction programs under EPCRS. The IRS explained this update is limited and is being published now primarily to set forth new VCP submission procedures, including the requirement that all submissions for voluntary corrections under VCP be electronically filed on www.pay.gov
beginning Apr. 1, 2019. The IRS will not accept paper submissions with postmarks on and after that date. To ease the transition to the new submission procedures, the IRS indicated that, from Jan. 1, 2019, through March 31, 2019, plan sponsors may file VCP submissions either electronically in accordance with Sections 10 and 11 of Rev. Proc. 2018-52, or by filing paper VCP submissions in accordance with the procedures in Sections 10 and 11 of Rev. Proc. 2016-51.
Rev. Proc. 2018-52 also includes modifications to Rev. Proc. 2016-51 to reflect recent changes in certain Employee Plans programs, including changes to the pre-approved plan programs for qualified plans and 403(b) plans, and to make certain other changes (which are listed in section 2.03 of Rev. Proc. 2018-52). These other changes are generally effective Jan. 1, 2019.
Partner, Washington National Tax Office
+1 202 521 1526
Managing Director, Washington National Tax Office
+1 202 521 1554
Senior Associate, Washington National Tax Office
+1 202 861 4107
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.