IRS Provides EPCRS Guidance Related to SECURE 2.0
The IRS in late May 2023 issued Notice 2023-43 to address questions and provide interim guidance related to Section 305 of SECURE 2.0. Section 305 provided for expansion of the Employee Plans Compliance Resolution System (EPCRS), and directs the Secretary of the Treasury to update EPCRS guidance within two years of enactment of SECURE 2.0. Revenue Procedure 2021-30 contains the current iteration of EPCRS.
Section 305 of SECURE 2.0 allows self-correction of any “eligible inadvertent failure” and provides for an indefinite correction period so long as correction is completed within a reasonable period after the error is discovered. An eligible inadvertent failure is one that occurs despite the existence of sufficient practices and procedures and is not egregious or abusive. Importantly, Notice 2023-43 specifies that plan sponsors can self-correct certain eligible inadvertent failures before the update of Revenue Procedure 2021-30, subject to conditions and limitations outlined in Q&As 1-11.
Section 305 of SECURE 2.0 also directs the Secretary of the Treasury to allow IRA custodians to address eligible inadvertent failures with respect to IRAs. Q&A 12 specifies that IRA custodians may not correct an eligible inadvertent failure under EPCRS before the release of updates to Revenue Procedure 2021-30.
The Department of Treasury and the IRS invite comments on this notice by August 23, 2023.
