Spectrum Resource Center

Advice, Articles, Events, Insights, News, Newsletters, Opinions, Press Releases, Updates, and More from Spectrum.


SECURE 2.0 Expansion of the Employee Plans Compliance Resolution System (EPCRS)

On May 25, 2023, the Internal Revenue Service (IRS) provided new interim guidance with Notice 2023-43 for plan sponsors participating in self-correction through the Employee Plans Compliance Resolution System (EPCRS). This notice provides guidance and clarity in the form of questions and answers with respect to the expansion of EPCRS for plan failures under section 305 of the SECURE 2.0 Act.

What is EPCRS?

The Employee Plans Compliance Resolution System (EPCRS) is in place to fix mistakes in a retirement plan so that plan sponsors can avoid plan disqualification. There are three ways to correct mistakes under EPCRS according to the IRS:

  1. Self-Correction Program (SCP) – Plan sponsors are permitted to correct certain plan failures without contacting the IRS or paying a fee.
  2. Voluntary Correction Program (VCP) – Plan sponsors are permitted to pay a fee and receive IRS approval for correction of plan failures (any time before a plan audit).
  3. Audit Closing Agreement Program (Audit CAP) – Plan sponsors are permitted to pay a sanction and correct a plan failure while the plan is under audit.

Revenue Procedure (Rev. Proc.) 2021-30

The current EPCRS program is laid out in Rev. Proc. 2021-30. Historically, Rev. Proc. 2021-30 provided that, under SCP, a plan sponsor of a qualified plan or 403(b) plan generally may self-correct certain significant operational failures and plan document failures by the last day of the third plan year following the plan year for which the failure occurred. Certain failures were also excluded from self-correction such as plan document errors, loan failures and eligibility failures.

SECURE 2.0 Expansion of EPCRS

SECURE 2.0 expands the ability for plan sponsors to make self-corrections proactively. Under Section 305, a plan sponsor may correct any “eligible inadvertent failure” at any time. An “eligible inadvertent failure” is generally a failure that:

  • Is not identified by the IRS prior to any actions demonstrating a specific commitment to implement a self-correction with respect to the failure
  • For which the self-correction is completed within a reasonable period after the identification of the failure
  • Is not egregious
  • Does not involve the misuse or diversion of plan assets
  • Does not directly or indirectly relate to an abusive tax avoidance transaction
  • Occurs despite the existence of established and routinely followed practices and procedures reasonably designed to promote and facilitate compliance with the applicable requirements of the Internal Revenue Code

Updated Guidance – Notice 2023-43

The Notice explains that plan sponsors can begin self-correcting certain eligible inadvertent failures (subject to certain limitations outlined in the notice) before EPCRS has been updated. SECURE 2.0 instructed the IRS to update Rev. Proc. 2021-30 no later than two years after the date of enactment (December 29, 2024.) However, there are several eligible inadvertent failures that a plan sponsor may not self-correct before the date Rev. Proc. 2021-30 is updated. Such failures include:

  • Failure to adopt initial written plan
  • Orphan plan failures
  • Significant failure in terminated plan
  • Demographic failures (coverage, nondiscrimination, participation testing)
  • Operation failures corrected by amendment resulting in less favorable benefit to participant
  • ESOP failure involving tax consequences other than plan disqualification
  • SEP or SIMPLE IRA failures with excess contributions remaining in IRA or for plans that do not use model/prototype document

Defining a “Reasonable Period” for Self-Correction

The notice clarifies that self-correction needs to be completed within a reasonable period after the failure is identified. The majority of eligible inadvertent failures will be considered corrected within a reasonable period if corrected by the last day of the 18th month following identification of the failure.

An eligible inadvertent error may be self-corrected before being identified by the IRS and may even be self-corrected post-identification if the plan sponsor can demonstrate “specific commitment to implement a self-correction” which includes:

  • Specific identification of failure; and
  • Actively pursuing correction

Correcting Plan Errors Moving Forward

It is important to note that Notice 2023-43 provides guidance and is not the final rule. Plan sponsors along with their service providers should continue to review and monitor the administration of their plan. If a mistake has been made, document each step of the correction process, and keep notes in a file that explains why a corrective action was taken. Having procedures in place will be helpful in case the plan is ever audited down the road.

Your Spectrum representative is available to help you answer any questions you may have about the self-correction of plan errors.  

blog comments powered by Disqus


professional plan design practice 401k defined benefit pension loan participant loan investing margin spectrum open golf pano cancer event tournament philanthropy retirement readiness fiduciary rule tax cuts newsletter cybersecurity plan termination merger acquisition gender retirement gap lifetime income investment returns women men fees dol documents compliance press release bi cloud technology azure plan intelligence docusign microsoft myretirement limits irs retirement plan contribution plan faq participant questions payroll finwell plan education financial wellness employees financial stress education entreprenuers business accumulation startup wealth asset allocation investments fis innovation ira technology charity award 40th anniversary celebration impact fiduciary tax deduction participant outcomes uncashed checks distributions automation recordkeeping case study millennials soc-1 portal psoy cash balance plan sponsor of the year abg mfa enrollment escalation video automatic qdia qualified default investment alternative roth debt credit saving safe harbor nondiscrimination adp acp top-heavy plan sponsor 3(16) erisa hardship withdrawal audit bond owner bundled unbundled forfeiture forfeit vested vesting consulting employer connect reports student loans db/dc providers services guide erisawrap welfare benefit plan fundraiser document cancer reserach retirement confidence unvested vested account balance wrap spd wrap document plan document welfare benefits employee benefits healthcare wrap market volatility participant behavior socially responsible esg plan participation spectrumopen spd wrapspd spectrumplatform qaca participation restate restatement erisa bond fidelity bond bonding goals plan amendment secure act SECURE secure act of 2019 legislation secureact secureact2019 secureactof2019 election 2020 coronavirus covid-19 business continuity cares act cares covid19 relief retirement plan relief the cares act covid the secure act workforce demographics older employees engagement SECURE 2.0 Act Retirement Plan Legislation 401(k) cbpp defined contribution

ERISA Workplace Retirement Plan Limits

The federal government annually publishes updated qualified retirement plan limits, which impact the contributions, benefit accruals, and compliance of ERISA covered qualified retirement plans. The below tables summarize the most significant changes in recent history.


Keep up on our evolving products, services, solutions, and technology through our Newsletters.

About Our Firm

Spectrum is a B2B consulting firm, which enables American Workers to plan and save towards a dignified financial future by designing, administering, and operating the ranges of retirement and financial plans for U.S. employers.

Get in touch

  • Address: 6402 19th Street, Tacoma, WA 98466, USA

  • Phone: +1 (253) 565-2100

  • Email: Contact Us Form