Treasury and IRS replace retirement plan correction framework and create IRA correction program

Treasury and the IRS issued two revenue procedures today: Revenue Procedure 2026-34, effective today, replaces Revenue Procedure 2021-30, and Revenue Procedure 2026-33 creates an IRA correction program effective May 1, 2027.

The plan procedure expands the Employee Plans Compliance Resolution System and replaces and restructures Revenue Procedure 2021-30. It keeps three tracks: the Self-Correction Program, the Voluntary Correction Program and the Audit Closing Agreement Program. Sponsors of qualified plans, section 403(b) plans, SEP arrangements and SIMPLE IRA plans can correct errors and keep providing retirement benefits on a tax-favored basis.

IRS Chief Executive Officer Frank J. Bisignano said in the announcement, “Hard working Americans will benefit from these procedures because they simplify and speed up how errors with certain retirement plans and IRAs can get corrected when there is a simple problem.”

The new IRA program, the IRA Compliance Resolution System, is modeled on the employee plan procedure and enacted as part of the SECURE 2.0 Act of 2022. It permits IRA custodians and IRA owners to request correction of certain eligible inadvertent failures caused by service-provider errors.

ICRS also gives plan participants and IRA owners a process for asking to waive the 60-day deadline on completing a rollover. Those requests currently must be submitted as private letter ruling requests and will transition to ICRS over the course of 2027 and 2028. Existing automatic waiver and self-certification procedures remain available at no cost to taxpayers who meet the requirements under Revenue Procedures 2020-46, 2016-47 and 2003-16.

SIMPLE IRA plans are named among the plan types the EPCRS procedure covers, so an employer's SIMPLE plan is on the timetable that began today. The May 2027 date belongs to the IRA program.

Treasury and the IRS invite comments on both programs. Each revenue procedure identifies the issues on which comments are particularly requested and specifies submission instructions and due dates.

Advisors whose clients hold IRAs at a custodian that has already flagged an internal processing error can ask now whether the custodian intends to file under ICRS once it opens and what to preserve in the meantime.