A New Era for Plan Corrections: IRS Unveils Long-Awaited Updates to EPCRS
On October 23, 2026, the IRS issued Revenue Procedure 2026-34, a comprehensive update to the Employee Plans Compliance Resolution System (“EPCRS”), which is the IRS program for correcting retirement-plan errors. The retirement plan community has been eagerly awaiting this guidance for several years, as we are now nearly two years beyond the Congressional deadline imposed on the IRS by the SECURE 2.0 Act. The update incorporates key correction provisions of SECURE 2.0 and interim IRS guidance, as well as other updates designed to improve EPCRS.
Who should pay attention? EPCRS is a key program for any employer that sponsors a retirement plan. The regulatory environment in which these plans operate is very complicated, and virtually all retirement plans will experience errors at some point. EPCRS provides plan sponsors with an opportunity to correct those errors, which could otherwise technically result in plan disqualification.
Overview of changes: The new EPCRS is well over 100 pages, and a full overview of all of the technical and procedural changes is beyond the scope of this alert. However, here are some key changes likely to have the broadest impact on plan sponsors:
- More errors qualify for self-correction. Section 305 of SECURE 2.0 directed the IRS to update EPCRS to significantly expand the types of errors that employers can fix through the self-correction program portion of EPCRS (“SCP”), without filing a formal application with the IRS, paying the associated user fee, and (often) waiting months or years for the IRS to sign off on the correction. Referred to in the new EPCRS as “eligible inadvertent failures,” these new qualifying mistakes include certain errors involving plan documents, nondiscrimination testing, employer eligibility, and plan loans. While Notice 2023-43 permitted plans to utilize these liberalized rules to correct certain failures on an interim basis, the new EPCRS Revenue Procedure fully incorporates the expansion of SCP and clarifies many aspects of the interim guidance.
- Employers may have more time to self-correct. Under the new EPCRS, an error generally will be considered corrected within a reasonable period (and therefore eligible for SCP, regardless of its significance) if correction is completed by the later of: (1) the end of the third plan year following the plan year in which the error occurred; or (2) 18 months after the error is discovered.
- Benefit overpayments may not have to be recovered. Section 301 of SECURE 2.0 dramatically changed the rules relating to how overpayments of retirement plan benefits are handled. Historically, correcting overpayments meant determining how the money would be recouped from the participant or otherwise restored to the plan. Under the new rules, many inadvertent overpayments do not have to be recovered from the participant or restored to the plan at all. Employers may still choose to seek repayment in appropriate cases, and special rules apply to rollover treatment of overpayments and certain statutory-limit violations. It is important to note that Section 301 of SECURE 2.0 also imposed many new restrictions on plan sponsors who do choose to recoup overpayments from participants. For the most part, those rules are not addressed in the new EPCRS, and additional guidance from the DOL is sorely needed.
- Correction relief for automatic enrollment errors is preserved. Section 350 of SECURE 2.0 made permanent favorable correction terms that permit certain automatic enrollment and automatic escalation errors to be corrected without a corrective contribution for the missed deferral opportunity. This relief was otherwise scheduled to sunset on December 31, 2023. This relief—as well as similar provisions applicable to certain limited-period missed deferral situations—now also extends to employees who have terminated.
Importantly, expanded self-correction and the new EPCRS do not replace sound plan administration. Simply having a written plan document is not enough. An employer must have established compliance procedures that were already in place and routinely followed.
What should plan sponsors do now?
- Take another look at known errors. An issue that previously required an IRS filing may now be eligible for self-correction.
- Document when errors are discovered and act promptly. Properly documenting the correction process (including the timing of error occurrence, discovery, and corrective actions) matters even more now, especially if an IRS examination later begins.
- Review how benefit overpayments are handled. The new rules may provide alternatives to automatically seeking repayment from a participant or restoring overpayments to the plan. They also impose restrictions on recouping payments and provide more favorable rollover treatment for many such situations.
Should you have any questions, please reach out to the authors or your Miller Canfield attorney.
