The Internal Revenue Service has issued two pieces of new guidance addressing retirement-related corrections: a much-anticipated update to the IRS correction program for addressing tax-qualified retirement plan errors and a new correction program that provides important relief opportunities for owners and custodians of Individual Retirement Accounts (IRAs).
Revenue Procedure 2026-34 updates the Employee Plans Compliance Resolution System (EPCRS), generally effective as of October 22, 2026. The updated guidance incorporates changes under the SECURE 2.0 Act of 2022, including those that were designed to expand self-correction, make the safe harbor for correcting automatic deferral failures permanent, and provide greater flexibility in addressing overpayments (see our LawFlash describing the SECURE 2.0 changes and BeneBits post with additional guidance). It also includes several additional changes aimed at making corrections more practical and less costly.
Revenue Procedure 2026-33 establishes a new IRA Compliance Resolution System (ICRS), effective May 1, 2027. Because IRAs were not eligible to use the correction procedures under EPCRS (other than limited corrections available to SIMPLE IRAs that were part of SIMPLE IRA plans), this development fills a longstanding gap by providing IRA owners and custodians the opportunity to correct certain IRA failures.
Initially, ICRS will consist only of a voluntary correction program that allows taxpayers to obtain IRS approval of corrections, but the IRS indicates that the program may be expanded later. In another change from the current state, IRA owners will seek waivers of the 60-day rollover requirement under ICRS rather than applying for a private letter ruling—during 2027, IRA owners can select between the two.
How We Can Help
Because the new EPCRS is effective immediately, plan sponsors should consider the impact the new guidance may have on new and outstanding compliance issues and the correction alternatives available to address them. And while ICRS will not go into effect until May 1 of next year, IRA custodians should consider the new guidance when trying to determine how to consider addressing errors.
Our team stands ready to help clients with all manner of compliance matters for retirement plans and IRAs. Please contact the authors of this blog post or your regular Morgan Lewis contacts with any questions.