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Employee Benefit Plan Update: IRS Revenue Procedures 2013-12 and 2013-22

April 23, 2013

Samantha C. Zahran, CPA, MBA
Manager

Updates to the Employee Plans Compliance Resolution System (EPCRS) were made by the Internal Revenue Service with Revenue Procedure 2013-12.  This Rev. Proc. modifies and supersedes Rev. Proc. 2008-50.  The new Rev. Proc. was issued on December 31, 2012 with an effective date of April 1, 2013.  EPCRS includes Self-Correction (SCP), Voluntary Correction with IRS approval (VCP) and Correction on Audit (CAP).

Significant highlights of Rev. Proc. 2013-12 are as follows:

  • 403(b) plans may now correct failures generally using the same procedures available for Qualified Plans.
     
  • The Voluntary Correction Program may be utilized for correction of a failure to adopt a 403(b) plan in a timely manner.  There is a 50% reduction in the fee If submitted by 12/31/13.
     
  • VCP submissions must include Form 8950 and Form 8951.  Submissions are no longer sent to Washington DC but rather Covington, KY.  There are changes in the appendix schedules as well.  A copy of the compliance fee check must be included in the submission.
     
  • The IRS letter Forwarding Program is no longer available as a search method for locating lost plan participants.  Reasonable actions that must be taken to locate lost participants are provided in the new Rev. Proc.
     
  • Clarification and inclusion of additional correction methods for improper exclusion of employees in a safe harbor 401(k) and 403(b) plans.
     
  • Clarification and modification of correction methods relating to participant distributions in a defined benefit plan.
     
  • There are several modifications to audit CAP sanctions and VCP fee reductions.

For full review of Revenue Procedure 2013-12 and to view the chart of significant changes to EPCRS, click on the following links:

Revenue Procedure 2013-22, released on March 28, 2013, now provides for pre-approved 403(b) plans!  This Rev. Proc. established procedures for IRS approval of 403(b) prototype plans and 403(b) volume submitter plans.  Please see link below for  the Rev. Proc.: 

 

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