To Err is Human – To Forgive is Up to the IRS in Rev Proc 2019-19

The IRS recently issued its latest version of the Employee Plans Compliance Resolution System (“EPCRS”) in Rev. Proc. 2019-19.  The EPCRS is the IRS program that assists employers in correcting both operational and document failures with respect to qualified retirement plans.  There are several welcome changes to the new EPCRS, including:

  • Certain plan loan failures can now be self-corrected:
    • If a participant defaults on a loan, the participant can pay a single sum corrective payment equal to the amount (plus interest) that would have paid to the plan  absent the failure and re-amortize the outstanding balance either over the remaining payment schedule or over the maximum allowed period.
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