With Revenue Procedure 2015-27, the IRS has made several modifications to the most recent restatement of The Employee Plans Compliance Resolution System (“EPCRS”) (found in Rev. Proc. 2013-12, 2013-4 I.R.B. 313). In general, the EPCRS sets forth a system of correction programs for sponsors of retirement plans that are intended to satisfy certain Internal Revenue Code (“Code”) sections, but have failed to meet those requirements for some period of time. EPCRS includes the Self-Correction Program (“SCP”), the Voluntary Correction Program (“VCP”) and the Audit Closing Agreement Program (“Audit CAP”).

With the new Revenue Procedure, the IRS’s most significant modification is the clarification that corrections for certain overpayments should be reasonable and appropriate for the failure. Depending on the facts and circumstances and the nature of the overpayment failure, this may mean using a correction method that does not involve recouping an overpayment from plan participants and beneficiaries who may have financial difficulty returning such overpayments.

Additional modifications include:

  • extending the period for correcting excess annual additions through the return of elective deferrals to affected employees from 2½ months to 9½ months;
  • reducing the circumstances under which determination letter applications are required to be submitted after making certain kinds of plan amendments;
  • in the case of corrective plan amendments with respect to VCP submissions where a determination letter application must be filed with the VCP submission, extending the correction period so that the amendment must be adopted by the later of 150 days after the date of the compliance statement or 91 days after a favorable determination letter is issued (or, for a governmental plan, by the later of 150 days after the date of the compliance statement or the 91st day after the close of the first legislative session that begins more than 120 days after a favorable determination letter is issued);
  • requiring applicants electing to use model VCP submission documents to submit such documents using certain specified forms;
  • requiring applicants wishing to obtain an acknowledgement of receipt of a VCP submission to use a specified IRS Letter to do so;
  • reducing compliance fees for VCP submissions that involve the failure to satisfy the minimum distribution requirements;
  • reducing VCP compliance fees relating to failures to meet certain requirements with respect to participant loans;
  • removing certain appendices in light of other modifications made in Rev. Proc. 2015-27; and
  • revising various references and appropriate citations and cross-references.

See Revenue Procedure 2015-27 for a complete explanation of the modifications.