A review of IRS Rev. Proc. 2019-19, Correction Procedures and Financial Incentives
We are all human. Mistakes happen, some of which are out of our control. With the various service providers utilized in the world of employee benefit plans, this statement couldn’t be more accurate. From payroll providers, third-party administrators, and the change of workforce within a company, errors can occur, and the Internal Revenue Service (IRS) acknowledges this.
IRS Correction Programs & Financial Incentives
As the IRS’s overall goal is to preserve participants’ retirement accounts, they have put in place correction programs to make it easy for companies to correct these errors. Included in these programs are financial incentives for finding and correcting errors as soon as possible, making it advantageous for companies to put in place controls to catch when errors happen.
What You Need to Know About IRS Rev. Proc. 2019-19
On April 19, 2019, the IRS issued Rev. Proc. 2019-19 which updates its Employee Plans Compliance Resolution System (EPCRS). EPCRS is the program that permits retirement plan sponsors and plan administrators to correct compliance failures that may adversely affect the tax-qualified status of their plans. The new guidance expands the IRS’ Self Correction Program (SCP) under EPCRS to specifically cover the correction of certain failures, many of which could only be corrected by submitting a Voluntary Correction Program (VCP) application with the IRS and paying a fee. The Expanded Self Correction Program provides the full report of changes.