Navigating the New EPCRS Rules: What Plan Sponsors Need to Know About Revenue Procedure 2026-34

If your company sponsors a retirement plan, you know that operational hiccups can happen. Fortunately, the IRS provides a safety net: the Employee Plans Compliance Resolution System (EPCRS).

The IRS has just issued Revenue Procedure 2026-34, a comprehensive update to the EPCRS framework that supersedes the previous Rev. Proc. 2021-30. This update formally incorporates critical changes mandated by the SECURE 2.0 Act and introduces several taxpayer-friendly modifications designed to make self-correction easier and more accessible than ever.

Effective October 22, 2026, these changes represent a significant shift toward encouraging voluntary compliance. Here are the top takeaways every plan sponsor and administrator needs to know.

1. Major Expansion of the Self-Correction Program (SCP)

Historically, the Self-Correction Program (SCP) was limited in scope. Rev. Proc. 2026-34 dramatically expands SCP to permit the self-correction of “Eligible Inadvertent Failures” without paying any fee or sanction to the IRS.

  • What’s new? You can now self-correct certain Plan Document Failures, Employer Eligibility Failures, Demographic Failures, and even plan loan failures under SCP.
  • Goodbye, Favorable Letter Requirement: The IRS has eliminated the requirement that a Qualified Plan or Section 403(b) Plan must have a favorable determination letter to be eligible for SCP.
  • Extended Correction Window: A self-correction is now deemed to be completed within a “reasonable period” if it is finished by the later of:
    1. The last day of the third plan year following the plan year in which the failure occurred, OR
    2. 18 months after the identification of the failure.

2. SECURE 2.0 Act: Easier Recovery of Plan Overpayments

Section 301 of the SECURE 2.0 Act changed the game for inadvertent benefit overpayments. The new revenue procedure clarifies that:

  • No Corrective Payment Required: In most cases, an “Inadvertent Benefit Overpayment” does not require the plan sponsor to make a corrective payment to the plan to maintain compliance.
  • Rollover Treatment: If a participant rolled over an inadvertent overpayment, the IRS will treat it as an eligible rollover distribution (provided recoupment is not sought), protecting the participant from unexpected tax penalties.
  • Small Payment Exception: If an overpayment or excess amount is $250 or less, the plan sponsor is not required to seek its return, nor are they required to notify the recipient that it is ineligible for tax-free rollover.

3. Safe Harbor for Employee Elective Deferral Failures

Section 350 of the SECURE 2.0 Act reinstated and expanded a safe harbor correction method for plans with automatic enrollment or escalation features.

  • No Sunset Date: The December 31, 2023, sunset on this safe harbor has been officially eliminated.
  • Broader Application: This safe harbor now extends to terminated employees and is available for SEP Arrangements and SIMPLE IRA Plans.
  • How it works: If the failure to implement an automatic contribution feature is corrected within 9½ months after the end of the plan year of the failure, no Qualified Nonelective Contribution (QNEC) is required for the missed deferrals, provided proper notice is given and corrective matching allocations are made within a reasonable period (deemed to be within 12 months).

4. Clarifications on “Under Examination” Status

The rules around when a plan is considered “Under Examination” have been refined. A plan is now considered under examination if it is aggregated with another plan that is under examination for the specific qualification requirement that failed. This prevents a failure in one area from automatically tainting the entire plan’s ability to use SCP for unrelated, insignificant operational failures.

5. Streamlined VCP and Audit CAP Procedures

For failures that don’t qualify for SCP, the Voluntary Correction Program (VCP) and Audit Closing Agreement Program (Audit CAP) remain available. The new procedure merges previous appendices into a single, streamlined Appendix, updates correction method examples, and revises procedures for group submissions to reduce administrative burden.

Why This Matters for Your Business

The overarching theme of Rev. Proc. 2026-34 is encouraging voluntary compliance. The IRS is making it easier, cheaper, and less daunting for plan sponsors to find and fix their own mistakes. However, this generosity comes with an expectation: plan sponsors must have established practices and procedures reasonably designed to promote compliance. A plan document alone is no longer enough; you must demonstrate that you are actively trying to operate the plan correctly.

Next Steps for Plan Sponsors

  1. Review Your Procedures: Ensure your internal administrative practices and procedures are documented, up-to-date, and routinely followed.
  2. Conduct a Self-Audit: Look for any “Eligible Inadvertent Failures,” especially regarding plan loans, automatic enrollment features, or excluded employees.
  3. Act Quickly: If you find a failure, take advantage of the expanded SCP windows. Remember, the clock starts ticking on the “reasonable period” as soon as the failure is identified.
  4. Consult Your Advisors: Retirement plan compliance is complex. Work with your third-party administrator, legal counsel, or tax advisor to determine if a failure qualifies for SCP or if a VCP submission is the safer route.

Disclaimer: This blog post is for informational purposes only and does not constitute legal or tax advice. Revenue Procedure 2026-34 contains highly technical rules and exceptions. Plan sponsors should consult with qualified retirement plan professionals to evaluate their specific circumstances.