Retroactive Amendments to Qualified Retirement Plans Through EPCRS; NEW EPCRS E-Filing Requirements

Correcting Plan Documents Retroactively to Conform to Operations

A live 110-minute CPE webinar with interactive Q&A


Tuesday, March 5, 2019

1:00pm-2:50pm EST, 10:00am-11:50am PST

Early Registration Discount Deadline, Friday, February 8, 2019

or call 1-800-926-7926

This webinar will provide employee benefits advisers and auditors with an in-depth and practical guide to making retroactive amendments to qualified retirement plans to remedy noncompliant terms and plan errors. The panel will explain the limited circumstances in which the IRS prescribes retroactive correction of plan documents as appropriate correction, as well as the circumstances in which, based on past experience, the IRS may be willing to accept a proposed retroactive correction of plan documents to conform to the plan’s past operations. The panel’s discussion will include the processes and potential pitfalls that practitioners often encounter in making retroactive corrections. The panel will also discuss the Service's changes to the EPCRS program in Rev. Proc. 2018-52, particularly the migration to mandatory electronic submission.

Description

Rev. Proc. 2018-52 makes almost no substantive changes to 2016-51. The only significant change is that 2018-52 requires electronic submission for all EPCRS Voluntary Correction Program (VCP) applicants.

Rev. Proc. 2018-52, like its predecessor (2016-51) prescribes retroactive correction by plan amendment in very limited circumstances. However, experienced practitioners have long understood that under the voluntary correction program (“VCP”), and in the audit closing agreement program (“Audit CAP”), the IRS will sometimes allow retroactive correction to conform the plan document to operations, well beyond the limited circumstances specified in EPCRS, and sometimes over a period stretching back many years. The key requirement is that the IRS must be persuaded that both the plan sponsor and the plan’s participants understood the plan's benefits to be consistent with the way the plan was operated, not written.

Notably, this potential avenue of correction has never been made explicit in any of the EPCRS Revenue Procedures, and some practitioners may not be fully aware of this correction opportunity. Further complicating matters for plan sponsors and advisers is that this approach seems to differ from the IRS’s stated rejection of "scrivener's error" as a reason for allowing retroactive plan corrections. Moreover, the IRS’s acceptance of retroactive correction is not binding on the DOL or plan participants under ERISA, thus requiring careful consideration of the potential application of ERISA (including judicial decisions such as the Verizon case, in which the IRS did not participate).

Listen as our experienced panel offers insights based on real-world experience regarding making both routine and non-routine retroactive plan amendments through VCP and Audit CAP, outlining approaches to reconcile often contradictory standards.

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Outline

  1. Overview of Employee Plans Compliance Resolution System (EPCRS) Voluntary Correction Program (VCP)
  2. Rev. Proc. 2018-52 new e-filing requirement
  3. Self-Correction Program (SCP)
  4. Voluntary Correction Program (VCP)
  5. Audit Closing Agreement Program (Audit CAP)
  6. Standards that plan sponsors must meet for IRS to approve retroactive plan correction
    1. Circumstances under which IRS will readily permit the plan sponsor to change plan documents to conform to plan operation
    2. Circumstances where IRS will consider permitting the plan sponsor to amend retroactively under appropriate circumstances
    3. Documenting an employer's intent and communications to employees and stakeholders
    4. History/pattern of operations
    5. Plan participants' understanding of plan operations even when operations deviated from operating documents
  7. Examples and illustrations
  8. IRS stated regarding "scrivener's error"
  9. Verizon and other ERISA cases involving retroactive correction of plan documents
  10. Other

Benefits

The panel will review these and other key questions:

  • Documenting sponsor and participants' understandings of plan benefits in circumstances sponsor wants to retroactively amend plan documents under a VCP submittal due to operational nonconformance with the written terms of the plan
  • How the IRS differentiates situations involving "scrivener's error" from those in which plan operations deviated from plan documents and parties understood the plan's terms to be consistent with operation rather than document terms
  • Similarities and differences in approaches to retroactive plan amendments between IRS and ERISA case law
  • New IRS requirements under Rev. Proc. 2018-52 for electronic filing of all EPCRS submittals

Faculty

Bailey, Luke
Luke D. Bailey

Partner
Strasburger & Price

Mr. Bailey specializes in employee benefits law and executive compensation. He has extensive experience in the tax...  |  Read More

Lucas, John
John Lucas

Managing Consultant
Findley

After spending over 15 years working as a tax and employee benefits consultant, primarily with a national accounting...  |  Read More

Additional faculty
to be announced.

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