New IRS Guidance for Correcting Overpayments Under EPCRS: Reconciling SECURE 2.0, Rollovers, Plan Amendments

BARBRI

This CLE webinar will provide employee benefits counsel a detailed analysis of recent IRS guidance for correcting overpayments and key challenges for plan sponsors and administrators. The panel will discuss the definition of "eligible inadvertent failure" under the current rules, reconciling SECURE 2.0 with the Employee Plans Compliance Resolution System's (EPCRS), treatment for rollovers, and potential plan amendments in light of recent IRS guidance.

Description

On Oct. 15, 2024, the IRS issued Notice 2024-77 providing guidance for correcting inadvertent benefit overpayments under SECURE 2.0. This issue, along with other noncompliance items, are typically revealed during a plan audit and can result in substantial penalties for employers. ERISA counsel and advisers must understand IRS and DOL enforcement and audit procedures and identify audit risks and steps to remedy noncompliance through available self-correction programs in light of recent IRS guidance.

The SECURE 2.0 Act of 2022 significantly expands the availability of self-correction of compliance failures involving employer retirement plans and IRAs. In addition, the Act changed the rules regarding the recoupment of "inadvertent benefit overpayments" from retirement plans and allows some fiduciary and tax-qualification relief for plans not seeking recoupment of an overpayment. However, certain conditions are imposed on plan fiduciaries when seeking a recoupment of an overpayment.

Notice 2024-77 clarifies how the SECURE 2.0 rules apply and interact with EPCRS with notable provisions such as the definition of "Inadvertent Benefit Overpayment," the application of certain EPCRS provisions, the treatment of rollovers, and other key items that must be considered in light of the recent IRS guidance.

Employee benefits counsel must have a complete understanding of the rules and guidance provided under Notice 2024-77 and Notice 2023-43 to navigate the nuances of plan errors and noncompliance in their analysis of their clients' administrative and operational practices.

Listen as our panel of experts discusses Notice 2024-77, Notice 2023-43, current IRS and DOL focus areas, correcting overpayments under the EPCRS, and identifying critical retirement plan issues and available correction methods.

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