Employee Plans Compliance Resolution System - (EPCRS)
The Employee Plans Compliance Resolution System (EPCRS) offers a comprehensive system of correction programs for sponsors of retirement plans that are intended to satisfy the requirements of sections 401(a), 403(b), 408(k) or 408(p) of the Internal Revenue Code, but which have not met these requirements for a period of time. This system allows plan sponsors to correct these failures and thereby continue to provide their employees with retirement benefits on a tax-favored basis. The components of EPCRS include the Self-Correction Program (SCP), the Voluntary Correction Program (VCP) and the Audit Closing Agreement Program (Audit CAP).
EPCRS includes the following basic elements:
- Self-Correction Program (SCP). A Plan Sponsor that has established compliance practices and procedures may, at any time without paying any fee or sanction to IRS, correct insignificant Operational Failures.
- Voluntary Correction Program (VCP). A Plan Sponsor at any time may pay a limited fee and receive IRS' approval for correction of a Qualified Plan, 403(b) Plan, SEP or SIMPLE IRA Plan. Under VCP, there are special procedures for anonymous submissions and group submissions in case a Plan Sponsor does not feel comfortable revealing certain operational failures to IRS.
Please note that this program cannot be used once your plan has been selected for an audit by Internal Revenue Service
- Correction on audit (Audit CAP). If a failure (other than a failure corrected through SCP or VCP) is identified during an IRS audit, the Plan Sponsor may correct the failure and pay a sanction. The sanction imposed will bear a reasonable relationship to the nature, extent and severity of the failure, taking into account the extent to which correction occurred before audit.