Many Atlanta businesses understand the complex challenges associated with managing a 401(k), 403(b), or other employee benefit plan. Maintaining compliance with the requirements set forth in the Employee Retirement Income Security Act (ERISA), ongoing DOL guidance, and IRS regulations is complicated often requiring the assistance of one, or more, outside consultants. The purpose of these regulations is to provide comprehensive protection of participant interests in several areas from plan communications and amendments to investments and loan procedures. Although Atlanta plan sponsors never intend to make a mistake, it is more than likely that at some point one will happen. For this reason, the IRS created the Employee Plan Compliance Resolution System (EPCRS) to facilitate the resolution of plan errors according to severity. On July 16th, the IRS released a new Revenue Procedure (RP 2021-31) which expands and updates several program rules and processes. To help clients, prospects, and others, broadly understand the changes, Wilson Lewis has provided a summary of the key details below.
The RP has introduced two new participant overpayment correction methods designed to make it easier for defined benefit plans to resolve overpayment issues including the funding exception and contribution correction methods. They are designed to reduce the need for defined benefit plans to seek overpayment reimbursement and streamline the repayment process.
The RP also eliminates anonymous submissions currently permitted as part of the Voluntary Correction Program (VCP) beginning after January 1, 2022. Concurrently, effective on the same date, the IRS will allow plans to make an anonymous request for a pre-submission meeting to discuss a potential VCP submission at no cost to the plan. It is important to note, if a plan sponsor submits a VCP request following the meeting, then it can no longer be anonymous.
The RP also extends the Self Correction Program (SCO) correction period for significant plan failures from the last day of the second plan year following the year in which the failure occurred to the last day of the third plan year following the year in which the plan failure occurred.
There was an extension of the safe harbor correction program, to December 31, 2023, for plans that fail to make elective deferrals for employees subject to the automatic enrollment feature common in 401(k) and 403(b) plans.
There was also an increase in the threshold from $100 to $250 for certain de minimis amounts for which a plan sponsor is not required to implement a correction.
Effective January 1, 2022, any plan which is required to submit payment for sanctions as part of an Audit CAP will no longer be permitted to pay by check but be required to use the pay.gov website.
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The updated version of the rules governing the Employee Plan Compliance Resolution System make important changes Atlanta plan sponsors need to carefully consider. If you have questions about the information outlined above or need assistance with a plan audit or administration issue, Wilson Lewis can help. For additional information call us at 770-476-1004 or click here to contact us. We look forward to speaking with you soon.
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