The IRS has just issued a new revenue procedure, Rev. Proc. 2021-30, which limits the number of plans that have to make IRS filings under the Voluntary Correction Program (“VCP”) in order to correct past errors.
The guidance expands the Self-Correction Program (“SCP”), which does not require an IRS filing, in two ways:
- Significant operational failures: The correction period for self-correction of significant operational failures is extended from two to three years.
- Retroactive plan amendments: The revenue procedure removes the requirement that all participants in the plan benefit from the retroactive amendment, making it easier to use retroactive plan amendments to correct operational failures under SCP.
The revenue procedure also adds new options with regard to correction of overpayments.