Quick Summary
On October 22, 2026, the IRS issued Revenue Procedure 2026-34. The revenue procedure updates the Employee Plans Compliance Resolution System (EPCRS), modifies and supersedes Revenue Procedure 2021-30, and is generally effective October 22, 2026.
EPCRS provides a framework for correcting eligible failures involving qualified plans, section 403(b) plans, SEP arrangements, and SIMPLE IRA plans through the Self-Correction Program (SCP), Voluntary Correction Program (VCP), and Audit Closing Agreement Program (Audit CAP).
What Plan Sponsors Need to Know
Self-Correction: A significant change in Revenue Procedure 2026-34 is the expansion of the Self-Correction Program. SCP allows plan sponsors to correct eligible failures without submitting a VCP application to the IRS or paying a VCP user fee. Examples of the expansion of SCP include, but are not limited to, the following:
- A qualified plan or section 403(b) plan is no longer required to be the subject of a favorable letter to use SCP.
- SCP applies to Eligible Inadvertent Failures, which may include certain operational failures, plan document failures, demographic failures, employer eligibility failures, and plan loan failures, subject to the revenue procedure’s eligibility requirements and exclusions.
- Correction of an Eligible Inadvertent Failure must be completed by the later of (i) the last day of the third plan year following the plan year in which the failure occurred or (ii) 18 months after the plan sponsor identifies the failure, in order to be deemed to have been completed within a reasonable period, subject to special rules for certain failures.
Voluntary Correction Program and Audit CAP
Some failures and correction methods remain ineligible for SCP, including egregious failures and failures or methods specifically excluded under Revenue Procedure 2026-34. When SCP is unavailable, plan sponsors should consider whether correction is available through VCP or if the plan or plan sponsor is under IRS examination, Audit CAP.
VCP generally requires a formal submission and payment of a user fee to the IRS. If the submission, which includes a description of the failure, proposed correction, and steps to prevent recurrence, is accepted, the IRS issues a compliance statement approving the correction on the stated terms.
A VCP submission generally must be made before the plan or plan sponsor comes under IRS examination. Other failures identified during an examination generally are resolved through Audit CAP procedures.
Where Further Clarification is Needed
The Treasury Department and the IRS requested comments on possible future EPCRS improvements and clarifications. One area for comment concerns the methods used to calculate earnings for certain corrections of operational failures in defined contribution plans.
Certain corrections require an earnings adjustment to participant accounts. When it is not feasible to make a reasonable estimate of actual investment results, Revenue Procedure 2026-34 permits the use of a reasonable interest rate and treats the rate used by the Department of Labor’s Voluntary Fiduciary Correction Program Online Calculator as reasonable for this purpose, subject to the revenue procedure’s conditions.
Under the current DOL Online Calculator methodology, the section 6621(a)(2) underpayment rate applies when lost earnings do not exceed $100,000, and the higher section 6621(c)(1) rate applies when lost earnings exceed $100,000. The Treasury Department and the IRS requested comments on proposals that would (i) add a safe harbor method using the higher section 6621(c)(1) rate and (ii) use the applicable DOL Online Calculator underpayment rate as an earnings floor for certain defined contribution plan corrections. These proposals are requests for comment and are not current requirements under Revenue Procedure 2026-34.
Conclusion
Qualified retirement plans provide significant benefits to plan sponsors and participants on a tax-favored basis. To preserve those benefits, compliance failures should be corrected in accordance with the applicable requirements, and Revenue Procedure 2026-34 provides the current EPCRS framework for making those corrections. It was published in Internal Revenue Bulletin 2026-46 on November 9, 2026.
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