PART II. PROGRAM EFFECT AND

ELIGIBILITY

SECTION 3. EFFECT OF EPCRS; RELIANCE

.01 Effect of EPCRS on Qualified Plans . If the eligibility requirements of section 4 are satisfied and the Plan Sponsor corrects a Qualification Failure in accordance with the requirements of APRSC in section 7, the VCR program in section 10, Walk-in CAP in section 11, or Audit CAP in section 14, the Service will not treat the Qualified Plan as disqualified on account of the Qualification Failure. If the Plan Sponsor corrects the failures in accordance with the requirements of this revenue procedure the plan will be treated as a qualified plan for purposes of applying § 3121(a)(5) (FICA taxes) and for purposes of applying § 3306(a)(5) (FUTA taxes).

.02 Effect of EPCRS on 403(b) Plans . If the applicable eligibility requirements are satisfied and the employer corrects a failure in accordance with the requirements of APRSC, TVC, or Audit CAP for 403(b) Plans, the Service will not pursue income inclusion for affected participants, or liability for income tax withholding, on account of the failure. However, the correction of a failure may result in income tax consequences to participants (for example, participants may be required to include in gross income distributions of Ex

2000–6 I.R.B. 521 February 7, 2000

cess Amounts in the year of distribution). In addition, if these requirements are met and correction is made under this revenue procedure, the annuity contracts or custodial accounts under a 403(b) Plan will be treated as annuity contracts described in § 403(b) for purposes of applying § 3121(a)(5) (FICA taxes) and for purposes of applying § 3306(a)(5) (FUTA taxes). However, contributions or allocations of Excess Amounts are generally treated as wages for purposes of FICA and FUTA taxes.

.03 Other taxes and penalties . See section 6.04 for rules relating to other taxes and penalties.

.04 Reliance . Taxpayers may rely on this revenue procedure, including the relief described in sections 3.01 and 3.02.