IRS Retirement Plan Correction Update Took Effect October 22, 2026, IRA Program Opens May 1, 2027

On October 22, 2026, the Treasury Department and the Internal Revenue Service (IRS) issued two revenue procedures on correcting errors in retirement plans and individual retirement accounts (IRAs). Rev. Proc. 2026-34 updates the Employee Plans Compliance Resolution System (EPCRS) and took effect the same day. Rev. Proc. 2026-33 creates a new IRA Compliance Resolution System (ICRS), which will take effect May 1, 2027.

Updated EPCRS Replaced Rev. Proc. 2021-30

EPCRS allows sponsors of qualified plans, section 403(b) plans, SEP arrangements and SIMPLE IRA plans to fix plan failures and keep the plans' tax-favored status. It includes the Self-Correction Program (SCP), the Voluntary Correction Program and the Audit Closing Agreement Program.

Rev. Proc. 2026-34 modifies and supersedes Rev. Proc. 2021-30, the prior version. It also supersedes Notice 2023-43, Notice 2024-77 and section II.I of Notice 2024-2, which gave interim guidance on changes made by the SECURE 2.0 Act of 2022.

Self-Correction Rules That Changed for Plan Sponsors

Under Rev. Proc. 2021-30, self-correction of significant operational failures and certain plan document failures required a favorable IRS letter for the plan. Those corrections had to be made by the last day of the third plan year after the year of the failure.

The new procedure drops the favorable letter requirement and allows self-correction of "eligible inadvertent failures," including certain plan loan failures. A correction finished by the later of the end of the third plan year after the failure or 18 months after it is identified is treated as timely.

Self-correction now also reaches certain demographic, employer eligibility and plan document failures, along with more failures in SEP arrangements and SIMPLE IRA plans. Once a plan or plan sponsor is under examination, SCP is generally available only if the sponsor has shown a specific commitment to correct or the failure is an insignificant operational failure.

Overpayment and Automatic Enrollment Correction Changes

Rev. Proc. 2021-30 included a safe harbor for correcting missed elective deferrals in plans with automatic enrollment or automatic escalation without a qualified nonelective contribution, but it was set to end December 31, 2023. The new procedure removes that sunset and extends the method to SEP arrangements, SIMPLE IRA plans and terminated employees.

For inadvertent benefit overpayments, the procedure follows section 414(aa) of the Internal Revenue Code and generally does not require a corrective payment to the plan. Plan sponsors may still seek recoupment. A corrective payment is still required for unrecouped overpayments tied to section 401(a)(17), 415 or 436 failures, except for amounts under $250.

Treasury and the IRS also requested comments on a proposal to use the underpayment rates in the Department of Labor's online correction calculator as a minimum for earnings in defined contribution plan corrections.

New IRA Correction Program Will Open May 1, 2027

ICRS carries out section 305(c) of the SECURE 2.0 Act. It will begin with only the IRA Voluntary Correction Program (IVCP), with no self-correction option for IRA failures.

IRA custodians and IRA owners, including beneficiaries of inherited IRAs, may apply. IVCP covers four failures. They are required minimum distribution shortfalls caused by a service provider, a service provider setting up the wrong type of IRA or a non-IRA account, nonspouse beneficiary distributions that should have been trustee-to-trustee transfers, and missed 60-day rollover deadlines where denying a waiver would be against equity or good conscience.

An IRA owner must be current on all income tax filing obligations to be included in a submission. IVCP is generally not available while the owner's return is under examination.

Waivers of the 60-day rollover requirement currently require a private letter ruling request. During 2027, requests may go through either ICRS or Rev. Proc. 2027-4, and starting in 2028 the IRS expects to accept them only under ICRS. Automatic waivers and self-certification under Rev. Procs. 2020-46, 2016-47 and 2003-16 remain available at no cost.

For submissions filed before January 1, 2028, the IVCP user fee is $3,500. A group submission by an IRA custodian costs $10,000 for the first 10 IRA owners plus $250 for each additional owner, up to $50,000.

Comments on both revenue procedures are due January 20, 2027. They may be filed at Regulations.gov or by mail.