SIMPLE IRA and EPCRS

[Guest merlin]

Are SIMPLE IRAs eligible for EPCRS yet? It looks like Rev. Proc. 2002-47 includes SEPs but not SIMPLEs.

But my real question concerns an employer who has not made matching cntributions for 2000,2001,and so far for 2002. Employer is willing to self-correct using the priciples of 2002-47 if not formally covered by the proc.,but Smith Barney (DFI/Custodian) won't accept the corrective contributions without a PLR. Any idea why? Any alternatives? Might another DFI be more flexible? Or is the PLR required?

[Gary Lesser]

It would look like a correction request needs to be submitted to the IRS first since it is ousite of EPCRS. Whether this is required in the form of a PLR I'm not sure.

Revenue Procvedure 2002-47 provides at Section 2.02(2)-- The Service and Treasury are considering expanding the procedures under EPCRS and are interested in receiving comments regarding, among other things, appropriate correction procedures for failures arising under SIMPLE IRAs (under § 408(p)) and §§ 457(B) plans. Submissions related to SIMPLE IRAs are currently being accepted by the Service on a provisional basis outside of EPCRS. Submissions relating to §§ 457(B) eligible governmental plans will be accepted by the Service on a provisional basis outside of EPCRS. Submissions relating to other §§ 457(B) eligible plans may be accepted outside EPCRS as Employee Plans develops experience in the §§457 area.

PART II. PROGRAM EFFECT AND ELIGIBILITY

SECTION 3. EFFECT OF EPCRS; RELIANCE

.01 Effect of EPCRS on Qualified Plans. For a Qualified Plan, if the eligibility requirements of section 4 are satisfied and the Plan Sponsor corrects a Qualification Failure in accordance with the applicable requirements of SCP in section 7, VCP in sections 10 and 11, or Audit CAP in section 13, the Service will not treat the Qualified Plan as failing to meet § 401(a). Thus, for example, if the Plan Sponsor corrects the failures in accordance with the requirements of this revenue procedure, the plan will be treated as a qualified plan for purposes of applying § 3121(a)(5) (FICA taxes) and § 3306(B)(5) (FUTA taxes).

.02 Effect of EPCRS on 403(B) Plans.

(1) Income taxes. For a 403(B) Plan, if the applicable eligibility requirements of section 4 are satisfied and the Plan Sponsor corrects a failure in accordance with the applicable requirements of SCP in section 7, VCP in sections 10 and 11, or Audit CAP in section 13, the Service will not pursue income inclusion for affected participants, or liability for income tax withholding, on account of the failure. However, the correction of a failure may result in income tax consequences to participants and beneficiaries (for example, participants may be required to include in gross income distributions of Excess Amounts in the year of distribution).

(2) Excise and employment taxes. Excise taxes, FICA taxes, and FUTA taxes (and corresponding withholding obligations), if applicable, that result from a failure are not waived merely because the failure has been corrected.

.03 Effect of EPCRS on SEPs. For a SEP, if the eligibility requirements of section 4 are satisfied and the Plan Sponsor corrects a failure to satisfy the requirements of § 408(k) in accordance with the applicable requirements of SCP in section 7 (but only if the corresponding Qualification Failure is an insignificant Operational Failure), VCP in sections 10 and 11, or Audit CAP in section 13, the Service will not treat the SEP as failing to meet § 408(k). Thus, for example, if the Plan Sponsor corrects the failures in accordance with the requirements of this revenue procedure, the SEP will be treated as satisfying § 408(k) for purposes of applying § 3121(a)(5) (FICA taxes) and § 3306(B)(5) (FUTA taxes).