To kick off 2013, the Internal Revenue Service (IRS) issued Revenue Procedure 2013-12 updating the Employee Plans Compliance Resolution System (EPCRS), the voluntary compliance program for employer-sponsored retirement plans.  Changes become effective on April 1, 2013, but plan sponsors may elect to use the revised program as soon as the IRS releases the newly created Forms 8950 and 8951.

Revenue Procedure 2013-12 outlines new submission procedures, including updated fees and newly required application documents.  It also clarifies and modifies current correction methods as well as establishes certain new correction methods.  A few of the most noteworthy changes include:

• 403(b) Plans.  403(b) plan documentation errors may now be corrected under the voluntary correction program (VCP).  For example, if a nonprofit employer failed to timely adopt a written plan document by the end of 2009, it may now use VCP to correct the failure.  To encourage participation, the IRS is offering a 50% reduction on the applicable VCP fee provided the submission is sent to the IRS by December 31, 2013 and the documentation failure is the only failure identified within the submission.
  
  
• Matching Contributions.  Previously, the IRS required that corrections for missed matching contributions be made in the form of a qualified non-elective contribution, which was immediately 100% vested.  Under the new rules, certain corrective matching contributions may be made subject to the plan's vesting schedule for matching contributions.
  
  
• Improperly Excluded Employees.  In addition to clarifying and revising current correction methods, the IRS has added new methods for calculating corrective contributions for employees who are improperly excluded from safe harbor 401(k) plans, 403(b) plans and SIMPLE IRA plans.
  
  
• 415(c) Failures.  The IRS clarifies that a plan (which provides elective deferrals and nonelective employer contributions) that corrects annual additions in excess of Code Section 415(c) limitations by returning elective deferrals to affected employees is eligible for the self-correction program, provided that the return of elective deferrals takes place within 2 1/2 months after the end of the plan's limitation year.
  
  
• Missing Participants.  To reflect the discontinuance of its letter forwarding program to locate missing participants, the IRS has added an extended correction period for plan sponsors trying to locate missing participants.  In addition, Revenue Procedure 2013-12 revises the reasonable actions that a plan sponsor must take.
  
  
• Electronic Fund Transfers.  The IRS will process applicable fees by converting submitted checks into electronic fund transfers, which require less time to process.  A plan sponsor must therefore be sure that sufficient funds are readily available in its checking account before issuing a check for the VCP fee.

The above items are only highlights of the changes to EPCRS.  

Contact counsel to learn how you might implement corrections under the revised EPCRS program.

© 2013 Perkins Coie LLP