IRS Updates Retirement Plan Correction Procedures
On October 22, 2026, the Internal Revenue Service (IRS) issued Revenue Procedure 2026-34, which updates its Employee Plans Compliance Resolution System (EPCRS) guidance for correcting qualified retirement plan errors. The new guidance replaces prior corrections rules last updated in 2021 and now formally incorporates guidance the IRS issued since the SECURE 2.0 Act became law in 2022.[1]
When the sponsor of an employer-sponsored retirement plan encounters a plan error, whether it be an operational failure to follow plan terms or a failure to amend the Plan in a timely manner, EPCRS serves as the IRS’s framework to correct the error and preserve the plan’s tax qualified status.
Under ECPRS, plan sponsors have three available programs for plan corrections: (1) Self-Correction Program (SCP), (2) Voluntary Correction Program (VCP), and (3) Audit Closing Agreement Program (Audit CAP). Generally, the new Revenue Procedure makes it easier to correct through SCP and reduces the need for VCP filings with the IRS.
New Revenue Procedure 2026-34 is a comprehensive update to ECPRS. It supersedes the prior Revenue Procedure by incorporating important changes under SECURE 2.0. Overall, the changes under SECURE 2.0 (as now incorporated into Rev. Proc. 2026-34) make it easier for plan sponsors to correct more plan errors without active involvement and review by the IRS as follows:
- Expansion of SCP through for “eligible inadvertent failures.”
Prior to SECURE 2.0, self-correction was limited by factors like whether the error was significant or insignificant, and how long had passed since a significant (or plan document) error had occurred. Certain types of errors were not eligible for SCP at all. After SECURE 2.0, any eligible inadvertent failure[2] can be self-corrected at any time. The types of correctable errors were also expanded to include plan loan failures, demographic failures, and employer eligibility failures. SEP Plans; SIMPLE IRAs; and qualified and 403(b) plans without a favorable IRS determination letter can also self-correct errors.
2. Permanent reduced missed-deferral opportunity corrections for plans with automatic contribution futures.
SECURE 2.0 made these safe harbor reduced corrections through Qualified Nonelective Contributions (QNECs) permanent and extends them to terminated employees. The new EPCRS Revenue Procedure incorporates this change for plans that have automatic enrollment or automatic escalation features for employees’ deferrals.
3. Flexibility for plan overpayments.
Prior to SECURE 2.0, ERISA generally required plan fiduciaries to make reasonable recoupment efforts from plan participants for plan overpayments. However, this often created a practical financial difficulty for participants when the plan mistakenly overpaid them benefits and later sought to recoup them. SECURE 2.0 and the new Revenue Procedure gives plan fiduciaries greater flexibility to determine whether to seek recoupment of overpayments.
What plan sponsors should do now
Sponsors should review open correction projects against the new procedure. This is particularly important for errors involving plan documents, loans, automatic contributions, and overpayments. Sponsors should also confirm that their administrative controls are documented as errors must be inadvertent and have only occurred “despite the existence of practices and procedures that are reasonably designed to promote and facilitate compliance.” If there are no administrative controls, plan errors do not qualify for self-correction. Where self-correction is unavailable or IRS assurance is important, the Voluntary Correction Program remains an option before the plan or sponsor comes under examination.
This article is for general informational purposes only and does not constitute legal advice. ERISA law is fact-specific, and readers should consult qualified ERISA counsel regarding their individual circumstances.
Ryan Curtis is a Director and Chair of Fennemore’s ERISA/Employee Benefits practice group, counseling employers on the administration of their benefit plans and helping trustees and administrators comply with federal laws, including ERISA, the Affordable Care Act, COBRA, and HIPAA. He can be reached at rcurtis@fennemorelaw.com.
Jenny Zhang is Of Counsel at Fennemore, focusing her practice on employee benefits and executive compensation, and the overlap between those areas and tax, labor, employment, and corporate law. She can be reached at jzhang@fennemorelaw.com.
David Sieck is an Associate Attorney in Fennemore’s Labor & Employment and ERISA practice groups, advising employers on a wide range of workplace employment matters and counseling plan sponsors and fiduciaries on plan governance and administration under ERISA, including related litigation. He can be reached at dsieck@fennemorelaw.com.
[1] The new Revenue Procedure 2026-34 is available at https://www.irs.gov/pub/irs-drop/rp-26-34.pdf (last visited October 26, 2026).
[2] A failure that occurs despite the existence of practices and procedures that are reasonably designed to promote compliance and is not egregious, nor relates to the diversion or misuse of plan assets, nor tax abusive, nor already discovered by the IRS. Self-correction of such error must be completed within a reasonable time after discovery of the failure.