The Internal Revenue Service (“IRS”) is very much aware that plan sponsors of tax-qualified retirement plans (such as 401(k) plans) make mistakes in plan administration. The types of mistakes are varied and numerous. For example, a plan sponsor may neglect to enroll an eligible employee in their 401(k) plan, apply the wrong deferral rate, use the wrong definition of compensation, or fail to timely deposit deferrals into the plan; and the list goes on and on. Plan mistakes (also called plan failures) are bound to occur due to the complexity of plan administration. Because to err in plan administration is human, the IRS created the Employee Plans Compliance Resolution System (“EPCRS”) to allow plan sponsors to fix certain plan failures and avoid the consequences of plan disqualification. Moreover, the IRS regularly updates its procedures, most recently on July 16, 2021, and plan managers should be encouraged to become familiar with the updated procedures.
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