EPCRS — Plan Correction and Disqualification (Portfolio 375)

Description

Bloomberg Tax Portfolio No. 375, EPCRS — Plan Correction and Disqualification, discusses the potentially adverse consequences of plan disqualification (in the case of tax-qualified plans, Simplified Employee Plans, and SIMPLE IRA plans) or income inclusion and related income or employment tax exposure (in the case of tax sheltered annuity plans), and describes the panoply of options available to plan sponsors when faced with plans that fail to conform to the exacting requirements that the tax law imposes on these types of plans. In particular, the Portfolio explains how sponsors of tax-qualified plans, §403(b) plans, SEPs and SIMPLE IRA plans may correct violations of §401(a), §403(a), §403(b), §408(k), or §408(p) either through retroactive plan amendments and §7805(b) relief, or by using any one or more of the correction procedures and programs that make up the Employee Plans Compliance Resolution System (or “EPCRS”). The Portfolio also includes a discussion of how a taxpayer may contest a proposed plan disqualification through the IRS and the Tax Court.

Table of Contents

I. Plan Disqualification – Effects of Plan Disqualification
II. The Disqualification Process
III. A Taxonomy of Plan Defects – Historical View
IV. Retroactive Plan Amendments, 7805(b) Relief and Closing Agreements Under 7121
V. The Development of Voluntary and Audit Correction Mechanisms
VI. The Employee Plans Compliance Resolution System – Basic Features
VII. EPCRS – Correction Programs
VIII. EPCRS Model Correction Methods and Earnings Adjustments
IX. Department of Labor Voluntary Correction Program