Employee Benefits Law Blog

The IRS recently issued Revenue Procedure 2026-34, a significant update to the Employee Plans Compliance Resolution System (EPCRS). The new guidance, which is effective immediately, incorporates changes made by the SECURE 2.0 Act and expands and clarifies several correction options available to retirement plan sponsors.

EPCRS allows employers to correct certain retirement plan errors while preserving the plan's tax-favored status. It includes three principal correction programs: the Self-Correction Program (SCP), the Voluntary Correction Program (VCP), and the Audit Closing Agreement Program (Audit CAP).

Although the new guidance contains a number of technical changes, several updates are particularly important for employers and plan administrators.

I. Expanded Self-Correction

One of the most significant changes is the expansion of the Self-Correction Program to reflect changes made by SECURE 2.0.

Under the new rules, employers generally may self-correct an "Eligible Inadvertent Failure," subject to certain requirements and exceptions. An Eligible Inadvertent Failure generally is a plan failure that occurs despite the existence of established practices and procedures reasonably designed to promote compliance. Failures that are egregious, involve the diversion or misuse of plan assets, or are directly or indirectly related to an abusive tax avoidance transaction do not qualify.

The expanded rules permit self-correction of a broader range of errors, including certain plan document failures, demographic failures, employer eligibility failures, and plan loan failures. A plan generally must have established compliance practices and procedures in place, and a plan document alone is not sufficient to establish those procedures.

Once an Eligible Inadvertent Failure is identified, it must be corrected within a reasonable period. Generally, a correction completed by the later of the end of the third plan year following the plan year in which the failure occurred or 18 months after the failure is identified is deemed to satisfy this requirement. Special timing rules apply to certain failures.

The expanded SCP rules may allow employers to correct more errors without making a formal VCP submission to the IRS.

II. Automatic Enrollment and Escalation Errors

The updated EPCRS also addresses SECURE 2.0's permanent relief for certain errors involving automatic contribution features.

For plans with an automatic contribution feature, including automatic enrollment and automatic escalation features, certain failures can be corrected without an employer contribution for the employee's missed deferral opportunity. To qualify for this safe harbor, correct deferrals must begin within the specified period, the affected employee must receive a required notice, and any missed matching contributions must be corrected, with earnings.

III. New Treatment of Inadvertent Benefit Overpayments

The updated EPCRS also incorporates SECURE 2.0's changes relating to inadvertent benefit overpayments.

For certain inadvertent benefit overpayments, a corrective payment to the plan generally is not required to maintain compliance. Different rules apply to overpayments resulting from failures involving certain statutory limits. The guidance also addresses circumstances in which a plan sponsor may seek recoupment from a participant or beneficiary.

For employers, the practical point is that discovering an overpayment does not necessarily mean that the participant must repay the amount. The cause and circumstances of the overpayment should be evaluated before determining the appropriate correction.

IV. Other Changes to EPCRS

Revenue Procedure 2026-34 includes several other notable changes. Among other things, it revises the rules for group VCP submissions, provides additional guidance regarding the use of retroactive plan amendments to correct operational failures, and adds a safe harbor correction method for certain failures involving suspension-of-benefits notices under defined benefit plans. The IRS also reorganized and streamlined EPCRS and its correction methods.

V. Takeaway

Revenue Procedure 2026-34 provides retirement plan sponsors with broader correction opportunities, particularly through expanded self-correction. It also provides significant relief for certain missed deferral errors and inadvertent benefit overpayments.

For employers, the practical takeaway is that retirement plan errors do not necessarily require a formal IRS filing to correct. Expanded self-correction may provide a more efficient path for many errors, but the appropriate correction depends on the nature of the failure and the requirements of EPCRS.

If you have identified a retirement plan error or have questions about how the updated EPCRS rules may apply to your plan, please contact a member of our Employee Benefits Practice Group. We can assist with evaluating the issue and determining whether self-correction or another EPCRS correction method is appropriate.