SECTION 2. EFFECT OF THIS

approved by the Internal Revenue Service (“Service”), thereby reducing employers’ uncertainty regarding their potential tax liability and participants’ potential tax liability.

to maintain the tax-favored status of their plans.

.03 Overview . EPCRS includes the following basic elements:

cedures may, at any time without paying any fee or sanction, correct insignificant Operational Failures under a Qualified Plan, a 403(b) Plan, a SEP, or a SIMPLE IRA Plan. For a SEP or SIMPLE IRA Plan, however, SCP is available only if the SEP or SIMPLE IRA Plan is established and maintained on a document approved by the Service. In the case of a Qualified Plan that is the subject of a favorable determination letter from the Service or in the case of a 403(b) Plan, the Plan Sponsor generally may correct even significant Operational Failures without payment of any fee or sanction if the correction is made within the time specified in section 9.02.

dit, may pay a limited fee and receive the Service’s approval for correction of a Qualified Plan, 403(b) Plan, SEP, or SIMPLE IRA Plan failure. Under VCP, there are special procedures for Anonymous Submissions and group submissions.

or VCP) is identified on audit, the Plan Sponsor may correct the failure and pay a sanction. The sanction imposed will bear a reasonable relationship to the nature, extent, and severity of the failure, taking into account the extent to which correction occurred before audit.

.01 Effect on programs . This revenue procedure modifies and supersedes Rev. Proc. 2008–50, 2008–2 C.B. 464, the prior consolidated statement of the correction programs under EPCRS.

.02 Modifications to VCP submission procedures . All VCP submissions made on or after April 1, 2013, are required to include a completed Form 8950, Application for Voluntary Cor- rection Program (VCP) Under the Employee Plans Compliance Resolution System (EPCRS), and a Form 8951, Compliance Fee for Application for Voluntary Correction Program Submis- sion Under the Employee Plans Compliance Resolution System (EPCRS ) . Section 11.12 provides new addresses that must be used when mailing VCP submissions to the Service. These procedures and addresses may be used by VCP applicants prior to April 1, 2013, as permitted by section 16 of this revenue procedure.

.03 Modifications relating to 403(b) Plans . This revenue procedure generally permits Plan Sponsors maintaining 403(b) Plans to correct a failure in the same manner that the same failure could be corrected under a Qualified Plan. The revenue procedure also updates EPCRS to coordinate with Notice 2009–3, 2009–2 I.R.B. 250, and the final regulations under § 403(b) that were issued on July 26, 2007. The definitions for 403(b) Plans (section 5.02) have been modified to add a definition of Plan Document Failure and to revise the definitions of Operational Failure, Demographic Failure, and Employer Eligibility Failure to coordinate with the new definition of Plan Document Failure. These definitions are revised for failures that occurred on or after the effective date of the regulations under § 403(b). These regulations are generally effective for taxable years beginning on or after January 1, 2009. (See section 16 for rules applicable to 403(b) failures that occurred in taxable years beginning before January 1, 2009.) With these revisions, corrections applicable to failures for 403(b) Plans are substantially the same as those available for Qualified Plans (see section 5.01). In addition, changes have been made in Appendix A and Appendix B to extend these correction methods to 403(b) failures. The correction principles for 403(b) Plans take into account the provisions of

2013–4 I.R.B. 317 January 22, 2013

Notice 2009–3. Notice 2009–3 provides that the Service will not treat a plan as failing to satisfy the requirements of § 403(b) and the regulations during the 2009 calendar year if (1) the plan sponsor adopts a written plan that is intended to satisfy the requirements of § 403(b) and the regulations, effective as of January 1, 2009, (2) during 2009 the plan sponsor operates the plan in accordance with a reasonable interpretation of § 403(b) taking into account the regulations, and (3) before the end of 2009, the plan sponsor makes its best efforts to retroactively correct any operational failure to conform to the terms of the written 403(b) Plan in a manner that is consistent with the correction principles outlined in section 6 of this revenue procedure.

EPCRS is available to correct failures that occur in years prior to 2009 in violation of § 403(b) with respect to a plan’s operation other than a failure to operate in accordance with the plan document. There is no document requirement applicable to 403(b) Plans prior to this date. Announcement 2009–34, 2009–18 I.R.B. 916, and Announcement 2009–89, 2009–52, I.R.B. 1009, provide guidance on written 403(b) Plans, including a retroactive remedial amendment period for years after 2009 that will permit employers to retroactively amend their plans for Plan Document Failures. To the extent that a remedial amendment period applies under Announcement 2009–89, a 403(b) plan will not have a Plan Document Failure during the period beginning January 1, 2010, and ending on a date to be announced in future guidance, pro- vided that the Plan Document Failure is corrected through a retroactive plan amendment that is adopted by the end of the remedial amendment period . See section 6.10(2) & (3) for special correction principles that apply for 403(b) Plans in connection with Notice 2009–3.

.04 Description of other modifications . The modifications to Rev. Proc. 2008–50 that are reflected in this revenue procedure include:

revenue procedure (and that generally includes losses, if applicable)

purposes of correcting a failed ADP, ACP, or multiple use test, any amounts used to fund QNECs must satisfy the definition of QNEC in § 1.401(k)–6

to determine a corrective distribution from a defined benefit plan

available as a method for locating lost plan participants who are owed additional retirement benefits, to clarify the actions that must be taken to locate those participants, and to provide for a limited extension of the VCP 150-day correction period and the SCP correction period set forth in sections 10.07(9) and 9.02(1) of this revenue procedure, respectively, for Plan Sponsors taking action to locate lost participants

§ 436 if a single employer defined benefit plan is under restriction at the time of correction

which a determination letter application may not be submitted under EPCRS

amendments,” and “optional law changes” and when the provisions of section 6.05(3)(a) are applicable, and adding a new section 6.05(3)(b) to improve clarity

letter application is not required and may not be submitted to correct a Demographic Failure, and to clarify the scope of reliance on a compliance statement or closing agreement

and may not be submitted with a VCP submission to correct a failure to adopt amendments required under the terms of a favorable determination letter

January 22, 2013 318 2013–4 I.R.B.

tion plans, including 403(b) Plans, and to clarify when an employer contribution to correct an Overpayment is required

plan document timely in accordance with the final regulations under § 403(b) and Notice 2009–3

ganizing the section to improve clarity, and clarifying the scope of reliance on a compliance statement

mission is made by an individual who represents the Plan Sponsor, such individual must satisfy the power of attorney requirements and provide a statement under penalty of perjury to that effect

specimen plan, the number of plans (for the purpose of determining the number of group submissions that may be required) is based on the number of basic plan documents, not adoption agreements

respect to multiemployer and multiple employer plans is based on participants rather than assets

to require that Forms 8950 and 8951 be included with all VCP submissions, and to make conforming changes consistent with this new requirement (including the consolidation of Appendices D and F procedures into a new two-part Appendix C)

and to reflect the use of the Form 8950 in VCP submission procedures

ument is being submitted as evidence of correction then the plan sponsor must identify the corrective plan language in the restated plan

fee must be included with the submission

and to refer to the Procedural Requirements Checklist on Form 8950

missions and, if applicable, accompanying determination letter applications effective for submissions made on or after April 1, 2013

when assembling the VCP submission, to remove duplicative items captured by Form 8950, and to clarify that an applicant must submit separate attachments and other necessary documents for both a VCP submission and a related determination letter application

missions along with the initial compliance fee

403(b) Plan timely is temporarily reduced by 50% if certain conditions are met

failure is the failure to adopt an amendment (upon which the favorable determination letter is conditioned) within the applicable remedial amendment period, and (b) the required amendment is adopted within three months of the expiration of the remedial amendment period for adopting the proposed amendment

2013–4 I.R.B. 319 January 22, 2013

of which is subject to a reduced fee, then the fee for the submission will be the lesser of the sum of the reduced fees or the fee determined pursuant to the schedule under section 12.02(1)

Plan Sponsor is not required to file a Form 5500 series return with regard to a Qualified Plan or 403(b) Plan eligible for VCP

during the determination letter application process not related to a VCP submission and adding section 14.04(3) and (4) to provide for reduced sanctions for certain nonamender failures discovered during the determination letter application process that were not related to a VCP submission

in some cases, a matching contribution owed to a participant may be made in the form of a corrective employer matching contribution, instead of a QNEC, so that the corrective employer matching contribution would be subject to the vesting schedule under the plan that applies to employer matching contributions

improper exclusion of employees from safe harbor 401(k) plans under §§ 401(k)(12) and 401(k)(13)

sion of employees from making elective deferrals to 403(b) and SIMPLE IRA Plans

pay a required minimum distribution in a defined benefit plan that is subject to a restriction under § 436 at the time of correction requires the Plan Sponsor to make a contribution to the plan

of a lump sum to a spouse to correct the failure to obtain spousal consent before making distributions to a participant for a plan that is subject to a restriction on single-sum payments under § 436(d) at the time of correction, is available only if the Plan Sponsor (or other person) makes a contribution to the plan

the early inclusion of an employee who did not satisfy the plan’s age, service, or entry date requirement, must be consistent with the rules relating to the limitations on plan amendments increasing liability for benefits under § 436(c)

Statement and (b) various Schedules (formerly Appendix F Schedules) that contain limited standardized failure descriptions and correction methods that may assist applicants when preparing VCP submissions