Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.
Compliance March 5, 2014
IRS Summarizes Voluntary Correction Choices for 457s
March 5, 2014 (PLANSPONSOR.com) - Some plan sponsors, under limited circumstances, may submit requests for voluntary correction to the Internal Revenue Service (IRS) for their Code Section 457(b) retirement plans.
Reported by Rebecca Moore
The IRS updated and expanded its Employee Plans Compliance Resolution System (EPCRS) in Revenue Procedure 2013-12; however, the IRS’s Employee Plans Voluntary Compliance (VC) team will consider requests on a provisional basis outside of the Employee Plans Compliance Resolution System (EPCRS). The agency notes governmental plan sponsors do not have to make a submission to VC to voluntarily fix problems with their 457(b) plans.
VC will not process submissions that involve the form of the written 457(b) plan. In addition, the agency says it has received several submissions alleging that a written 457(b) plan was not adopted in a timely manner, or amended for some tax law or income tax regulation; VC will not issue closing agreements for these matters and will decline to process these requests and refund any payments. Plan sponsors who want the IRS to review their 457(b) plan document or consider any other document form issue may request a private letter ruling.
A governmental plan sponsor has until the first day of the plan year that begins more than 180 days after the IRS notifies them of the failure to self-correct their plan failures. Considering this, they may not need to make voluntary submissions to the IRS in most cases.
If a governmental plan sponsor needs to request additional relief or simply wants IRS approval for a correction method for a non-plan document failure, they may make a submission to VC as permitted by Rev. Proc. 2013-12.
More information is here.