Leaderboard

I have a few points to add: (1) SECURE 2.0 section 305 opens with "Except as otherwise provided in the Internal Revenue Code of 1986, regulations, or other guidance of general applicability prescribed by the Secretary of the Treasury or the Secretary’s delegate". This seems to give the IRS/Treasury pretty broad discretion to issue guidance saying that self-correction is not permissible in certain specific contexts. As a technical matter, it could be read literally to mean that self-correction has not yet been extended at all, because the existing EPCRS program is "guidance of general applicability prescribed by the Secretary of the Treasury or the Secretary’s delegate". However, it seems pretty apparent from the context of SECURE 2.0 that Congress intended to expand self-correction, so most people seem to be operating under the assumption that self-correction is broadly expanded unless and until the IRS clarifies that it is not. That said, it seems pretty clear that the IRS could issue guidance tomorrow and say that no document failures can be self-corrected. So, "what the IRS allows" is quite relevant. (2) Even before SECURE 2.0 was passed, EPCRS permitted some document failures to be self-corrected. If correction of the scrivener's error would favor participants, correction is fairly broadly available. Have you reviewed the Rev. Proc. to see whether you can self-correct under pre-SECURE 2.0 rules? (3) I think SECURE 2.0 reads most naturally to say that you can self-correct any eligible inadvertent failure, so long as you act promptly after you discover it to implement the substantive correction prescribed by EPCRS. There are a handful of limited exceptions: (i) if the IRS discovers the failure on audit before you take steps that demonstrate a specific commitment to self-correction, (ii) if the self-correction is not completed within a reasonable period of time after the failure is discovered, (iii) if an exception prescribed in the IRS guidance that hasn't yet come out applies, (iv) if the failure is not an "eligible inadvertent failure" (plan fails to maintain appropriate practices and procedures, or failure is egregious, intentional, abusive, etc.), then self-correction is not permitted. But I don't see any exception in SECURE 2.0 saying that you can't self-correct plan document failures or nondiscrimination failures. (4) The main reason to utilize VCP at this point is to obtain certainty regarding the correction approach you are selecting. If the correction is clear under EPCRS, and none of the limited exceptions to self-correction applies, then there is no reason to file a VCP submission. However, if the client wants to move forward with a correction approach that is not clearly correct under EPCRS, then an IRS submission can offer an opportunity to obtain certainty that your correction approach is not going to be challenged by the IRS down the road. Of course, participants could still sue, and their claims would not be bound by an IRS compliance statement anyways.