IRS Updates Info on Correction Procedures

The IRS has updated the information it provides on its website on retirement plan correction procedures to reflect Revenue Procedure (Rev. Proc.) 2016-51. The IRS on Sept. 29 issued Rev. Proc. 2016-51, which modifies the Employee Plans Compliance Resolution System (EPCRS) to take into account the changes in the determination letter application program under Rev. Proc. 2016-37.

Key changes the IRS highlights include the following:

Determination letter applications no longer permitted when applying the correction programs under EPCRS. The requirement for a plan sponsor to submit a determination letter application to the IRS when correcting qualification failures that include a plan amendment no longer applies.

Fees. Fees associated with the Voluntary Correction Program (VCP) are now user fees and no longer set forth in the EPCRS revenue procedure. For VCP submissions made:

• in 2016, refer to Rev. Proc. 2016-8 and Rev. Proc. 2013-12 to determine the applicable user fee; and

• after 2016, refer to the annual employee plans revenue procedure that sets forth user fees to determine VCP user fees for that year.

SCP. The availability of the IRS Self-Correction Program (SCP) for significant failures has been modified to provide that, for qualified individually designed plans, a determination letter need not be current to satisfy the Favorable Letter requirement.

The IRS also provides information on changes to the IRS Audit Closing Agreement Program (Audit CAP) and also reminds that:

• it will no longer refund half of the paid user fee if there is disagreement over correction in Anonymous Submissions; and

• it continues to accept comments from the public on expanding EPCRS correction rules to provide additional guidance on the recovery or recoupment of overpayments.

Effective Date

The IRS notes that Rev. Proc. 2016-51 is effective January 1, 2017, and that plan sponsors may not apply provisions before that date. Rev. Proc. 2013-12, as modified by Rev. Proc. 2015-27 and Rev. Proc. 2015-28, are in effect for 2016.