The IRS has updated the portion of its website that addresses how to self-correct defective 403(b) plan provisions during the remedial amendment period (RAP).
Self-corrections of plan provisions that violate the Internal Revenue Code Section 403(b) written plan rules may be made by adopting plan amendments during the RAP, which lasts through March 31, 2020. Self-corrections may involve adding required provisions or correcting defective provisions, and can be made by:
Generally, the correction must be retroactive to the later of Jan. 1, 2010, or the plan’s effective date. In addition, if the plan was administered based on the defective provision, this also must be retroactively corrected.
To take advantage of the RAP, a written 403(b) plan must have been adopted by Dec. 31, 2009 (or the effective date of the plan, if later). If it has not been, a plan’s violations must be corrected under the IRS Voluntary Correction Program (VCP).
The site provides examples of the types of plan provisions and plan operations that can be self-corrected or fixed through the VCP. They involve failing to include language limiting participants’ annual additions provisions allowing participants to make deferrals that are larger than the Internal Revenue Code allows and discretionary provisions, which don’t have to be included but must follow the rules if they are.
The IRS notes that the employee plans compliance resolution system (EPCRS), not self-correction and the VCP, must be used if the plan document complies with the law but the plan is not operated as the plan terms require.
Self-corrections of plan provisions that violate the Internal Revenue Code Section 403(b) written plan rules may be made by adopting plan amendments during the RAP, which lasts through March 31, 2020. Self-corrections may involve adding required provisions or correcting defective provisions, and can be made by:
- adopting a 403(b) pre-approved plan by March 31, 2020, that has a 2017 opinion or advisory letter; or
- amending their individually designed plan by March 31, 2020.
Generally, the correction must be retroactive to the later of Jan. 1, 2010, or the plan’s effective date. In addition, if the plan was administered based on the defective provision, this also must be retroactively corrected.
To take advantage of the RAP, a written 403(b) plan must have been adopted by Dec. 31, 2009 (or the effective date of the plan, if later). If it has not been, a plan’s violations must be corrected under the IRS Voluntary Correction Program (VCP).
The site provides examples of the types of plan provisions and plan operations that can be self-corrected or fixed through the VCP. They involve failing to include language limiting participants’ annual additions provisions allowing participants to make deferrals that are larger than the Internal Revenue Code allows and discretionary provisions, which don’t have to be included but must follow the rules if they are.
The IRS notes that the employee plans compliance resolution system (EPCRS), not self-correction and the VCP, must be used if the plan document complies with the law but the plan is not operated as the plan terms require.
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