IRS Overhauls Retirement Plan Correction Program, Opens a Path to Fix IRA Errors
The Treasury Department and the IRS on Oct. 22, 2026, released two revenue procedures that change how retirement plan mistakes get fixed. Revenue Procedure 2026-34 replaces Rev. Proc. 2021-30 as the rulebook for the Employee Plans Compliance Resolution System (EPCRS), the program employers use to correct errors in qualified plans, 403(b) plans, SEP arrangements and SIMPLE IRA plans. It took effect the day it was released. Revenue Procedure 2026-33 creates something that has not existed before: a formal IRS correction program for individual retirement accounts, the IRA Compliance Resolution System (ICRS), which opens May 1, 2027.
Both documents carry out the SECURE 2.0 Act of 2022, which directed Treasury to widen self-correction and extend correction relief to IRAs. The new EPCRS procedure also supersedes the interim notices that had carried much of that relief.
What changed for employer plans
EPCRS keeps its three tiers: the Self-Correction Program (SCP), which requires no IRS filing; the Voluntary Correction Program (VCP), which requires an application and user fee; and the Audit Closing Agreement Program (Audit CAP), used when the IRS finds the problem first. The new procedure shifts weight toward self-correction.
Broader self-correction. Sponsors may self-correct an "eligible inadvertent failure," meaning an error that occurs even though the plan has compliance practices and procedures in place. Egregious failures, diversion or misuse of plan assets, and abusive tax-avoidance transactions are excluded. Certain participant loan failures can now be self-corrected as well.
No determination letter needed. A favorable IRS determination letter is no longer a precondition for qualified and 403(b) plans to use SCP.
A defined "reasonable period." Self-correction must be completed within a reasonable time after the error is identified. A fix completed by the later of the last day of the third plan year after the failure year, or 18 months after identification, is treated as timely.
Limits once an exam starts. For a plan already under IRS examination, self-correction is generally limited to insignificant operational failures unless the sponsor had shown a specific commitment to correct beforehand.
Overpayments. Sponsors generally need not recover inadvertent benefit overpayments or replace them with corrective contributions, though exceptions remain for overpayments tied to certain statutory limits. If a sponsor does not recoup, the overpayment generally can be treated as an eligible rollover distribution.
Automatic enrollment errors. The safe harbor for fixing missed automatic enrollment and escalation deferrals, which earlier guidance had tied to a Dec. 31, 2023, sunset, no longer has an end date. It now also reaches SEP and SIMPLE IRA plans and employees who left before the error was corrected.
Small-dollar relief. Overpayments and excess amounts of $250 or less generally need not be recovered, distributed or forfeited, and sponsors no longer have to send participant notices for excess amounts at or below that level.
The procedure also revises the Audit CAP sanction for "nonamender" failures found during determination-letter review and updates lost-participant and VCP group-submission procedures.
A first correction program for IRAs
ICRS is narrower than EPCRS, at least at launch. It covers four kinds of failures, three of which stem from errors by a custodian or other service provider:
a required minimum distribution shortfall caused by a service provider's error;
an account opened as the wrong type of IRA, or not as an IRA at all;
a nonspouse beneficiary who is taxed because of a provider's inadvertent distribution or rollover error; and
a rollover that missed the 60-day deadline where a waiver is warranted.
Self-correction is not available under ICRS for now. Corrections go through an IRA Voluntary Correction Program that requires a submission and results in an IRS compliance statement. Either the custodian or the IRA owner may apply, but only the owner may request a 60-day rollover waiver. For submissions made before Jan. 1, 2028, the user fee is $3,500 for an individual filing. A custodian with a systemic error affecting at least 10 IRA owners may file a group submission for $10,000, which covers the first 10 owners, plus $250 for each additional owner, up to $50,000.
ICRS also absorbs 60-day rollover waiver requests, which today require a private letter ruling. During 2027, taxpayers may use either route; beginning in 2028, the IRS expects to accept waiver requests only through ICRS. The existing no-cost automatic waiver and self-certification procedures for late rollovers remain available.
Who is affected
Plan sponsors of 401(k), 403(b), SEP and SIMPLE IRA plans, and their administrators and recordkeepers.
IRA custodians, which gain a formal channel for fixing errors, including systemic ones.
IRA owners and beneficiaries whose accounts were mishandled, or who missed a rollover deadline and cannot use self-certification.
What to do now
Revisit open corrections. Because Rev. Proc. 2026-34 is already in effect, sponsors with pending or newly found errors should evaluate them under the new rules, which may allow self-correction where a VCP filing once seemed necessary.
Document everything. Self-correction depends on established compliance practices. Written procedures, a record of when each error was identified, and documentation of the fix will matter if the IRS later examines the plan.
Calendar the correction window. Track the deemed-reasonable deadline for each error; options narrow once an examination begins.
Prepare for May 2027. Custodians should identify which recurring errors fall within the four ICRS categories and budget for user fees.
Weigh in. Treasury and the IRS are seeking comments on both procedures. Comments on the IRA program are due by Jan. 20, 2027, through regulations.gov (docket IRS-2026-1387); each revenue procedure states its own comment instructions.
Sources
This article is general information, not tax, legal, or accounting advice. Consult a qualified professional about your situation.
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