Employee Benefit Plan Update: IRS Revenue Procedures 2013-12 and 2013-22April 23, 2013
Samantha C. Zahran, CPA, MBA
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.: