Scrivener's errors & EPCRS

[Flyboyjohn]

Have a situation where we can demonstrate employer intent, both by clear instructions to the plan document provider and actual operation of the plan, but document provider made a scrivener's error in a plan amendment.

I know IRS historically doesn't recognize scrivener's errors but wondering if anyone has seen any losening of that position or whether an anonymous VCP filing would just be a waste of time?

Thanks

[jpod]

Definitely not a waste of time, but your much more likely to get a favorable result if all communications to participants (particularly the SPD) were consistent with the employer's intent. Although the corrective amendment is not supposed to result in a 411(d)(6) cutback, I have seen where IRS will ignore that as a practical matter. Note that VCP only gets you relief from plan disqualification on account of the correction via an amendment; it is not binding on the courts if participants were to sue for benefits as provided under the incorrect document. On the other hand, there are some cases (see Verizon) that recognize the scrivener's error concept.

[Peter Gulia]

Situations of this kind suggest another reason for writing a summary plan description independently from those who compile the plan document.

If an employer relies on a recordkeeper's or document provider's system to produce both the plan and the SPD, using the software will result in the SPD expressing the same mistake made in the plan document.

If the employer (or a service provider separate from the one that produces the plan document) writes the summary plan description, doing so sets up an opportunity for the employer (or someone!) to read both documents to consider whether they are logically consistent.

[12AX7]

Not to be your devil's advocate, but that is very unrealistic in the world I live in. I take over a number of plans each year, typically from a bundled provider and more often than not there are errors in the drafting of the EGTRRA document where provisions that were in effect for many years did not make it into the last document because of oversight, lack of quality control, etc.

I have a saying. You can pay a lot for something and cry once. Or pay a little and end up crying many times. That cycle will not be broken but you make a good point.

After I amend and restate a document, the client must read through the plan document with me and I explain each provision and we compare to how the client administrates the plan. It doesn't surprise me anymore that the prior TPA or service provider could have prevented drafting errors or operational issues.

[Peter Gulia]

12AX7, thank you for sharing your experience. We see that you too have some quality-control methods for detecting some miscues.

(I recognize that my SPD method tends to work with an employer that's big enough to have a human-resources person, and much harder to do if the would-be reviewer is the chief executive.)

I have tried the method of out-loud checking each adoption-agreement selection, including line-by-line explanations of each choice. In your experience, how long does it take you to do such an exercise (while still feeling comfortable that the employer expresses the choices it really intends)?