IRS Expands Employee Benefit Plan Self-Correction Program
According to the IRS, the expansion now allows:
- The use of SCP to resolve certain plan document failures
- Correction options and possible relief from deemed distributions associated with specified failures involving plan loans made to participants
- More opportunities to correct certain operational failures by plan amendment
So what does this mean for your organization? If you have an operational failure (a failure in which the plan is not operating in accordance with the plan document), you may be eligible for self-correction if:
- The correction method is a retroactive amendment to the plan document
- That corrective amendment provides a benefit to participants (i.e., increases their account or prevents a corrective distribution), and
- The benefit provides a uniform increase in benefits, rights, or features to all employees eligible to participate in the plan.
Also note that as of April 1, 2019, Voluntary Correction Program (VCP) submissions must be made electronically at pay.gov. Any paper VCP submissions postmarked after March 31, 2019, will be returned.
More information is available on the IRS website.
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