Suggested Correction Methods in EPCRS

[Guest PBJ]

Are the correction methods outlined in EPCRS the only correction methods available for those given failures? For instance, if a plan fails ADP testing are the only approved correction methods the QNEC or one-to-one method? Or, can the plan sponsor propose, in its VCP application, to do something different, given its own unique facts and circumstances?

Thoughts?

Thank you!

[Guest Pensions in Paradise]

The plan sponsor can propose a different correction method.

[John Feldt ERPA CPC QPA]

If the IRS does not like the proposed correction method in the VCP application, they will negotiate with you on the method of correction.

If, ultimately, an acceptable agreement cannot be reached, the case is closed without settling, and the plan year (or years) in question remain unprotected.

Last fall at the IRS annual ASPPA conference, an IRS official stated that they've only had a handful where no agreement could be made. In those cases, they had the option to turn the case over to the IRS examiners for audit, but they intentionally chose not to do so, "to preserve the integrity of the EPCRS program" and stating "who would want to use a program that opens you up to an audit?" Since the program is voluntary, she stated that they felt only egregious cases should be turned over for a true audit when no agreement can be reached, but so far none of these "unsettled" closed cases were egregious enough for that.

[401_4_ever]

Interesting, because I've heard of the DOL auditing plans for which they've denied a VFCP application for...

[John Feldt ERPA CPC QPA]

Sounds like the DOL has a different approach than the IRS. I assume you've only seen that with regards to the DOL's VFC program.