What Is Audit CAP for a 401(k) Plan?

Audit CAP is the IRS correction process for significant retirement-plan qualification failures that remain unresolved when the IRS finds them during examination. The sponsor fixes the plan, pays an agreed Treasury amount and enters into a binding agreement with the IRS.^[1][2]

The expensive part is easy to misunderstand.

That Treasury amount is not:

• the corrective contribution
• the participant earnings adjustment
• the VCP user fee
• a fixed percentage of plan assets
• automatically a fixed percentage of the plan's potential disqualification tax.

Those are different numbers.

Audit CAP Is the Third EPCRS Route

EPCRS gives a plan sponsor three principal ways to resolve qualification failures:

INV-110 covers EPCRS.

INV-115 covers SCP.

INV-116 covers VCP.

Audit CAP is what remains when the IRS is already involved and a significant failure has not been validly resolved through another correction route.^[2]

An IRS Audit Does Not Automatically Mean Audit CAP

This distinction matters after SECURE 2.0.

Some failures can still be corrected under SCP during an examination.

Current guidance preserves self-correction for an:

insignificant failure

even if it is discovered during the examination.^[9]

The expanded inadvertent-failure framework can also preserve SCP in specified cases where the sponsor had already demonstrated concrete pre-examination commitment to correcting the identified failure.^[9]

So the correct sequence during an audit is not:

IRS found error → Audit CAP automatically.

It is:

IRS found error → determine whether valid SCP treatment remains available → use Audit CAP for the unresolved qualification failure if necessary.

Audit CAP Has Three Separate Obligations

For a qualified 401(k), the core Audit CAP resolution has three components:^[1][2]

Correct the failure

Restore the plan and affected participants using an acceptable correction method.

Pay a sanction

The sanction is negotiated with the IRS.

Execute a closing agreement

The sponsor and IRS sign a binding agreement covering the identified tax matters and periods.

Each component does different work.

The Sanction Does Not Replace the Correction

Assume a 401(k) improperly excluded 20 employees.

Correction requires:

• missed employer contributions
• earnings
• perhaps missed-deferral-opportunity amounts
• testing review
• participant account restoration.

The audit resolution can add:

a payment to the U.S. Treasury

on top of that work.

The sponsor cannot substitute a Treasury payment for participant restoration.

Participant restoration fixes the plan.

The sanction resolves the tax-qualification exposure created by reaching correction during examination.

Correction Under Audit CAP Often Resembles SCP or VCP

IRS 401(k) Fix-It guidance repeatedly uses the same basic correction method across:

• SCP
• VCP
• Audit CAP

for common operational failures.^[7][8]

What changes is the process and economic consequence.

Example:

Failed ADP test.

The actual plan correction can still involve the same types of:

• corrective distributions
• QNECs
• earnings
• testing work.

During the audit resolution, the sponsor also negotiates the Treasury amount and settles the qualification issue through the agreement.^[7]

The Sanction Is Negotiated

The current EPCRS procedure describes the Treasury payment as:

a negotiated amount

determined from the facts and circumstances.^[2]

That wording is important.

Older versions of EPCRS described the sanction as a negotiated:

percentage of MPA.

Revenue Procedure 2021-30 does not use that formulation as the controlling rule.

It says negotiated amount.

The MPA remains an important factor.

It is not a mandatory formula.

Do Not Use an Old "X% of MPA" Shortcut

Suppose MPA is calculated at:

$2 million.

That does not make the negotiated amount automatically:

• 5% = $100,000
• 10% = $200,000
• 20% = $400,000.

The current procedure requires a facts-and-circumstances negotiation.^[2]

MPA affects leverage.

It does not dictate the invoice.

What Does MPA Measure?

For a qualified plan, the Maximum Payment Amount (MPA) approximates:

the tax the IRS could collect if the plan were disqualified.^[2]

For open taxable years, the calculation can include:

1. tax on the plan trust
2. additional employer tax from loss of deductions for plan contributions
3. additional participant income tax from losing tax-favored treatment of allocations
4. tax associated with noncompliant participant loans
5. other tax caused by the qualification failure that would apply but for EPCRS correction.^[2]

This is a tax-exposure concept.

Not a participant correction account.

MPA Component 1: Tax on the Trust

A qualified plan trust generally receives tax-exempt treatment under Section 501(a).

Disqualification can expose trust earnings to tax.

The MPA therefore includes the tax the IRS could collect from the trust for open years, including applicable interest or penalties.^[2]

For a large plan with substantial investment earnings, this component can be meaningful.

MPA Component 2: Lost Employer Deductions

Qualified-plan contributions can produce employer deductions subject to applicable rules.

Disqualification can jeopardize those deductions.

The potential additional employer tax attributable to lost deductions enters the MPA calculation.^[2]

That means MPA can grow with:

• contribution levels
• employer tax exposure
• number of open years.

It is not tied only to the dollar size of the particular operational mistake.

MPA Component 3: Participant Income Inclusion

Qualified-plan treatment generally defers participant income taxation on plan allocations until distribution under applicable rules.

Disqualification can create participant-level income inclusion.

The MPA can therefore include additional participant income tax for open years, including tax related to certain rolled-over distributions.^[2]

A plan with many participants can create a large theoretical disqualification exposure even when the underlying failure affects a narrower population.

That is why the next distinction matters.

MPA Is Not the Sanction

The MPA answers roughly:

What could the federal tax consequences look like if qualification were lost?

The negotiated Treasury payment answers:

What negotiated amount is appropriate to resolve these failures without disqualifying the plan?

Those are not the same question.

Section 14 specifically requires the sanction to bear a reasonable relationship to:

• nature
• extent
• severity

of the failures.^[2]

That requirement prevents the MPA from functioning as a mechanical bill.

The Applicable VCP Fee Is a Floor Reference

The current procedure says the negotiated amount generally will not be less than:

the VCP user fee applicable to the plan.^[2]

For regular VCP submissions in 2026, current IRS fees are:^[6]

Do not read that table as:

Audit CAP costs $2,000, $3,500 or $4,000.

Those figures are only the general lower reference point.

The negotiated sanction can be materially larger.

Factor 1: What Controls Existed?

The IRS considers the steps the sponsor took to ensure that the plan had no failures.^[2]

Examples:

• eligibility reconciliation
• compensation-definition review
• annual amendment calendar
• contribution-limit monitoring
• payroll-to-recordkeeper reconciliation
• independent compliance testing
• rehire controls.

This makes internal controls economically relevant during an audit.

Controls are not just preventive.

They can become sanction evidence.

Factor 2: Did the Sponsor Try to Find Its Own Errors?

The Service also considers steps taken to identify failures that may have occurred.^[2]

A sponsor that performs:

• annual compliance review
• plan-document-to-payroll mapping
• periodic data sampling
• merger/acquisition plan review

has a different posture from one that waits for the IRS to detect everything.

Audit CAP rewards the distinction between:

we had a process and missed this

and:

we never looked.

Factor 3: How Much Was Corrected Before Examination?

This is one of the strongest practical factors.

The EPCRS procedure expressly considers:

the extent to which correction had progressed before the examination was initiated, including full correction.^[2]

That means a sponsor can improve its position even if it does not complete a VCP filing before audit.

Pre-examination correction matters.

Example: Same Failure, Different Audit Posture

Two employers each discover the same $80,000 compensation error.

Employer A

Before IRS contact:

• identifies every affected participant
• contributes $80,000
• adds earnings
• reruns testing
• fixes payroll mapping
• documents the work.

IRS examination begins later.

Employer B

Discovers the error internally.

Does nothing.

IRS finds it eight months later.

The underlying failure can be identical.

Their Audit CAP negotiating posture is not.

Section 14 tells the IRS to consider the correction progress completed before examination.^[2]

Early Correction Can Matter Even When VCP Was Never Filed

This creates a subtle but important point.

A sponsor can lose VCP eligibility when examination begins.

That does not make all prior work worthless.

If the sponsor corrected:

• participant accounts
• earnings
• plan terms
• procedures

before examination, that work can still matter in the negotiation.^[2]

The correction may also reduce the substantive work remaining during the audit.

Factor 4: How Many Employees Were Affected?

The IRS considers:

the number and type of employees affected.^[2]

A payroll mapping error affecting:

3 participants

is different from a systemic eligibility error affecting:

800 participants.

Dollar amount matters.

Population breadth matters separately.

Factor 5: What Happened to NHCEs?

The procedure specifically considers the number of nonhighly compensated employees who would be adversely affected if the plan lost qualified status.^[2]

That is not a random factor.

Qualified-plan nondiscrimination rules are designed in large part to protect rank-and-file employees.

A failure concentrated against NHCEs can create a materially worse correction narrative.

Example: Same Dollars, Different Population

Failure A:

• $100,000 total error
• affects 2 owner-HCEs.

Failure B:

• $100,000 total error
• affects 75 NHCEs excluded from employer contributions.

The principal amount is identical.

The employee impact is not.

Audit CAP is a facts-and-circumstances program precisely because those failures should not be priced mechanically the same.

Factor 6: Is It a Coverage or Nondiscrimination Failure?

Section 14 specifically asks whether the failure involves:

• Section 401(a)(4)
• Section 401(a)(26)
• Section 410(b).^[2]

For a typical 401(k), that makes:

• coverage
• nondiscrimination

especially relevant.

INV-113 explains demographic failure.

A broad demographic failure can require adding benefits to a meaningful NHCE population before the plan reaches a corrected state.

Factor 7: Is the Problem Employer Eligibility?

The IRS separately considers whether the failure is solely an:

Employer Eligibility Failure.^[2]

INV-114 covers that rare 401(k) category.

Why single it out?

Because the problem is structurally different from a miscalculated match.

The employer itself may have been legally ineligible to maintain the cash-or-deferred arrangement.

Factor 8: How Long Did the Failure Continue?

Duration matters.^[2]

A one-payroll error detected quickly is different from:

the same error repeated for nine years.

Long duration can signal:

• weak controls
• failure to review
• broader participant impact
• larger correction
• more difficult data reconstruction.

Time changes both severity and credibility.

Factor 9: Why Did It Happen?

The cause matters.

The Revenue Procedure gives examples such as:

• transcription error
• transposed numbers
• minor arithmetic error.^[2]

Those facts are different from:

• deliberate override
• repeated ignored warnings
• consciously using a plan provision the sponsor knew was wrong.

The program is not supposed to price innocent data errors and sustained noncompliance identically.

Factor 10: The Maximum Payment Amount

MPA appears at the end of the listed general factors.^[2]

That placement is useful.

It is one input among several.

A strong sanction analysis therefore does not say:

"MPA is $5 million, so sanction is X."

It says:

• MPA is $5 million
• failure affected 4 of 700 participants
• sponsor had meaningful controls
• issue was a one-time data conversion error
• sponsor fully corrected before examination
• NHCE harm was limited
• recurrence controls are operating.

The negotiation evaluates the entire record.

Large MPA Does Not Automatically Mean Large Failure

Imagine a mature 401(k) with:

• $200 million in assets
• hundreds of participants
• substantial historic contributions.

Its theoretical disqualification tax exposure can be large.

IRS examination discovers:

an isolated vesting configuration error affecting four participants.

Correction principal:

$18,000

plus earnings.

A large MPA can still be relevant.

But treating the entire plan's theoretical disqualification exposure as though it were the economic size of the vesting error would ignore the Section 14 requirement that sanction relate reasonably to the actual failure.^[2]

Small Correction Does Not Guarantee Small Sanction

Reverse the facts.

Correction principal is only:

$25,000.

But the sponsor:

• ignored the issue for six years
• had no controls
• affected mostly NHCEs
• received vendor warnings
• corrected nothing before examination.

The small participant dollar amount does not erase the adverse facts.

Correction cost and Treasury-payment exposure measure different things.

What Happens to Nonamender Failures?

Revenue Procedure 2021-30 adds special sanction factors for qualified-plan:

Nonamender Failures.^[2]

These can include:

• whether the plan has a favorable letter
• internal controls for required amendments
• whether a timely amendment was adopted but later found defective
• broader Required Amendments List compliance
• whether the sponsor reasonably concluded an amendment did not apply.^[2]

INV-112 explains document and nonamender failures.

The point here is narrower:

document governance can directly affect negotiations.

Determination Letter Cases Can Also Reach a Closing Agreement

Audit CAP is principally associated with IRS examination.

The EPCRS procedure also contains special treatment for specified nonamender failures discovered during the determination letter application process.^[2]

So:

Audit CAP = only an audit field agent finding a payroll error

is too narrow.

The closing-agreement structure can also appear in the determination process for applicable document failures.

Participant Loan Failures Have an Extra Factor

For a participant loan that violates Section 72(p)(2), the IRS also considers the extent to which the failure resulted from:

• employer or agent action
• participant or beneficiary action.^[2]

That distinction can affect the resolution.

The MPA can also include tax the IRS could collect because the loan no longer qualifies for exclusion from gross income under Section 72(p)(2).^[2]

The IRS Can Require Better Procedures

Audit CAP does not end with:

write check, sign agreement.

If existing administrative procedures are inadequate, the IRS can condition the resolution on implementing stated procedures.^[2]

That can require operational changes such as:

• new reconciliation
• additional review
• written controls
• vendor oversight
• amendment calendar
• training.

The Service is resolving both:

the failure

and:

the process that allowed it.

Example: Compensation Failure

Plan includes bonuses.

Payroll excludes them for four years.

IRS examination discovers the problem.

Correction may require:

• reconstruct compensation
• calculate missed employer contributions
• address missed deferral opportunities where applicable
• add earnings
• rerun ADP/ACP or other testing
• include former participants
• correct payroll codes.

Audit CAP adds:

• sanction analysis
• negotiated resolution
• procedural commitments.

The payroll fix alone is not the audit resolution.

Example: Coverage Failure

Controlled-group analysis was wrong.

Plan improperly tested only one subsidiary.

Correct group testing fails Section 410(b).

Correction may require:

• corrective amendment
• added NHCE allocations
• earnings
• revised testing.

Sanction facts include:

• number of affected NHCEs
• duration
• sponsor's controlled-group controls
• acquisition history
• whether the sponsor attempted to identify the issue before examination
• MPA.

This is why a coverage case can be materially more complex than a one-participant payroll error.

The Final IRS Agreement Is Binding

Section 13 makes the signed resolution binding on:

• IRS
• plan sponsor

with respect to:

the tax matters identified in the agreement for the periods specified.^[2]

That is the legal value of the resolution.

The Service gets:

• correction
• sanction
• procedural commitments.

The sponsor gets:

• resolution of the stated qualification issue
• preservation of plan treatment on the agreed terms.

The Agreement Is Not a Full-Plan Warranty

Suppose the final document covers:

• 2022–2025 compensation-definition failure.

It does not automatically resolve:

• undisclosed loan defects
• a 2026 Section 415 failure
• unrelated late deposits
• a different employer plan.

Scope is defined by the actual agreement.

The right diligence question is:

What tax matters and periods does this document resolve?

Not:

"Do we have an Audit CAP letter?"

No Agreement Means Real Disqualification Risk

The EPCRS procedure is explicit.

If the sponsor and IRS cannot agree on:

• correction
• sanction

the qualified plan can be disqualified.^[2]

That gives both sides reason to negotiate.

It also explains why Audit CAP should not be treated as an entitlement to any correction or sanction the sponsor proposes.

The sponsor can preserve qualification.

But agreement is required.

Disqualification Is the Reference Threat, Not the Normal Goal

MPA is built around theoretical disqualification tax exposure.

Audit CAP exists so the plan usually does not have to reach that result.

The sanction therefore sits between:

low-cost voluntary correction

and:

full tax consequences of disqualification.

That is the economic logic of the program.

Audit Resolution vs. VCP User Fee

The VCP fee is predictable.

Audit CAP is not.

That uncertainty is part of the cost of waiting.

Correction Cost vs. Sanction

Adding these numbers together as:

"the penalty"

obscures the economics.

Only one row is the Treasury sanction.

Facts That Can Improve the Sanction Posture

No factor guarantees a specific dollar result.

But Section 14 makes several facts affirmatively relevant:^[2]

• strong pre-existing controls
• sponsor efforts to identify failures
• substantial correction completed before examination
• limited affected population
• limited NHCE harm
• short duration
• isolated data or arithmetic error
• complete cooperation
• credible procedural repair.

These are not negotiation slogans.

They need evidence.

Facts That Can Worsen the Posture

The inverse facts can be damaging:

• no compliance controls
• no internal testing
• repeated recurrence
• long duration
• many affected NHCEs
• ignored warning signs
• no correction before examination
• weak explanation for cause
• large disqualification tax exposure
• resistance to reasonable corrective action.

Audit CAP puts a price on governance failure as well as technical failure.

Evidence Beats Narrative

A sponsor should be able to produce:

• dated reconciliation reports
• committee minutes
• vendor tickets
• payroll change logs
• correction spreadsheets
• deposit confirmations
• employee notices
• plan amendments
• testing reports.

Saying:

"we take compliance seriously"

adds little.

Showing a control that usually worked, the isolated point where it failed and the dated fix is much stronger.

Build the Sanction File Separately From the Correction File

The correction file answers:

How was the plan made whole?

The sanction file answers:

Why should the negotiated amount reflect these particular facts?

The second file should organize the Section 14 factors.

Example structure:

Do not make the examiner reconstruct the sponsor's best facts from scattered email.

MPA Calculation Deserves Tax Expertise

The MPA can include potential tax exposure across:

• trust
• employer
• participants
• loans
• other failure-related taxes.^[2]

That can require coordination among:

• benefits counsel
• tax counsel
• CPA
• TPA
• payroll
• recordkeeper.

A rough account-balance estimate is not an MPA.

The definition is tax-based.

Open Tax Years Matter

The MPA definition focuses on:

open taxable years.^[2]

That means the theoretical disqualification calculation is not simply:

all plan contributions since inception.

Statutes of limitation and applicable tax years matter.

The exact analysis can be technical.

It should be documented rather than assumed.

Audit CAP Does Not Automatically Resolve Excise Taxes

An IRS retirement-plan examination can identify nonqualification issues that produce separate taxes.

Examples can include:

• Section 4979 tax for late ADP/ACP correction
• prohibited transaction excise tax
• excess contribution issues
• participant income adjustments.^[4]

The IRS agreement covers the tax matters it actually addresses.

Do not assume the negotiated qualification sanction automatically absorbs every separate tax consequence.

It Does Not Replace DOL Fiduciary Correction

The IRS administers qualification and tax rules.

The Department of Labor administers ERISA fiduciary requirements.

A late participant-deferral deposit can create:

• IRS tax issues
• prohibited transaction issues
• DOL fiduciary issues.

The IRS resolution does not automatically resolve every DOL consequence.

Parallel problems require parallel analysis.

Example: Insignificant Failure During Audit

IRS examines a 250-participant plan.

Agent finds an isolated operational error:

• 2 participants
• small dollars
• one year
• sound controls
• prompt correction.

Current EPCRS rules can permit SCP for an insignificant failure even when discovered during examination.^[9]

If the facts support that classification:

no Audit CAP sanction may be required for that particular error.

That is why failure classification still matters after the audit starts.

Example: Correction Was Already Underway

Sponsor identifies a missed-match issue.

Before any IRS contact:

• participant list finalized
• calculations completed
• funding authorized.

IRS examination starts before the deposit clears.

Under the current expanded SCP rules, the sponsor may have a basis to argue that it had demonstrated the required pre-examination commitment to correction.^[9]

The exact facts matter.

Audit CAP should not be assumed until SCP availability is resolved.

Example: Audit CAP Is Clearly the Route

IRS examination discovers:

• five-year eligibility failure
• 120 affected NHCEs
• no prior internal discovery
• no correction
• weak controls.

The plan cannot use SCP for the unresolved significant failure.

VCP is no longer available because examination has begun.

The sponsor now needs to:

1. agree on affected population
2. agree on correction
3. fund participant restoration and earnings
4. repair administrative procedures
5. calculate relevant tax exposure
6. negotiate sanction
7. sign the final agreement.

That is the classic Audit CAP case.

Audit CAP Is Not Designed to Punish the Participant

The sponsor generally bears:

• corrective funding
• administrative cost
• negotiated sanction.

The EPCRS correction principles still aim to restore participant rights.

A plan participant should not interpret:

"the plan is under Audit CAP"

as:

"the IRS is taking a percentage of my account."

That is not how the sanction works.

Transaction Implications

A business sale with an open Audit CAP case can complicate:

• benefits representations
• indemnities
• purchase-price escrows
• closing conditions
• plan merger timing.

Buyer counsel may want to know:

• failure scope
• correction status
• proposed sanction
• expected agreement
• remaining participant obligations.

VCP often fits transaction planning better because it starts before examination.

Once Audit CAP is active, timing is less controllable.

Why Early Correction Has Asymmetric Value

Fixing a failure before IRS examination can help in three ways:

1. SCP may avoid an IRS fee entirely
2. VCP can buy formal approval for a predictable fee
3. even if Audit CAP later becomes necessary, pre-examination correction is a stated sanction factor

That is unusually strong incentive alignment.

Delay usually moves the sponsor in the wrong direction.

Frequently Asked Questions

What does Audit CAP stand for?

Audit Closing Agreement Program.

Is Audit CAP part of EPCRS?

Yes.

It is the correction-on-audit component of the Employee Plans Compliance Resolution System.^[2][5]

When is Audit CAP used?

Generally when the IRS identifies a qualification failure during examination and that failure has not been validly corrected through SCP or VCP.^[2]

Does every audit error require Audit CAP?

No.

An insignificant failure can retain SCP treatment during examination, and current guidance can preserve SCP in other specified pre-examination correction circumstances.^[9]

What does the sponsor have to do?

Generally:

• correct the failure
• pay a negotiated sanction
• enter into a binding agreement with the IRS.^[1][2]

Is the sanction the same as the correction amount?

No.

Participant correction and Treasury sanction are separate obligations.

Is the sanction a fixed percentage of plan assets?

No.

Is it a fixed percentage of MPA?

No under the current Revenue Procedure 2021-30 formulation.

The sanction is a negotiated amount based on facts and circumstances; MPA is one factor.^[2]

What is the Maximum Payment Amount?

For a qualified plan, it is an amount approximately equal to the tax the IRS could collect upon plan disqualification for open taxable years, using the tax components defined in EPCRS.^[2]

Does the sponsor pay the full MPA?

Not automatically.

MPA informs sanction analysis but is not itself the negotiated sanction.

What is the minimum sanction?

The procedure says the sanction generally will not be less than the VCP user fee applicable to the plan.^[2]

What factors affect the sanction?

Among them:

• controls
• efforts to identify errors
• correction completed before examination
• affected employees
• NHCE impact
• failure type
• duration
• cause
• MPA.^[1][2]

Does correcting before the audit matter?

Yes.

The extent of pre-examination correction is an express sanction factor.^[2]

What happens if the sponsor and IRS cannot agree?

The EPCRS procedure says the qualified plan can be disqualified if the parties cannot agree on correction or sanction.^[2]

What does the final IRS agreement protect?

It is binding for the tax matters identified in the agreement and the periods specified.^[2]

Does it protect unrelated failures?

Not automatically.

Scope is limited to the agreement.

Does Audit CAP settle DOL violations?

Not by itself.

IRS qualification correction and DOL fiduciary correction are separate regimes.

The ROIStreet Audit CAP Decision Sequence

IRS examination identifies a problem → classify the failure → determine whether SCP still validly applies → define affected years and participants → reconstruct full participant correction → identify what was corrected before examination → document controls and root cause → calculate relevant Maximum Payment Amount → organize Section 14 sanction factors → agree with IRS on correction → negotiate sanction → agree on procedural improvements → execute the binding IRS agreement → pay sanction → complete and document every corrective action → separately address excise tax, participant tax and DOL issues

The mistake to avoid is treating Audit CAP as a penalty table.

There is no ordinary table.

Audit CAP is a negotiated resolution of qualification risk after the IRS is already involved. The sponsor's best economic leverage is usually created before the examination begins—through controls, early detection and actual correction.

Sources & References

1. Internal Revenue Service: Audit Closing Agreement Program — General Description — https://www.irs.gov/retirement-plans/audit-closing-agreement-program-audit-cap-general-description
2. Internal Revenue Service: Revenue Procedure 2021-30 — Employee Plans Compliance Resolution System — https://www.irs.gov/irb/2021-31_IRB
3. Internal Revenue Service: EPCRS Overview — https://www.irs.gov/retirement-plans/epcrs-overview
4. Internal Revenue Service: EP Examination Process Guide — https://www.irs.gov/retirement-plans/ep-examination-process-guide
5. Internal Revenue Service: Correcting Plan Errors — Fix Plan Errors — https://www.irs.gov/retirement-plans/correcting-plan-errors-fix-plan-errors
6. Internal Revenue Service: Voluntary Correction Program Fees — https://www.irs.gov/retirement-plans/voluntary-correction-program-vcp-fees
7. Internal Revenue Service: 401(k) Plan Fix-It Guide — Failed ADP and ACP Nondiscrimination Tests — https://www.irs.gov/retirement-plans/401k-plan-fix-it-guide-the-plan-failed-the-401k-adp-and-acp-nondiscrimination-tests
8. Internal Revenue Service: 401(k) Plan Fix-It Guide — Eligible Employees Were Excluded — https://www.irs.gov/retirement-plans/401k-plan-fix-it-guide-eligible-employees-werent-given-the-opportunity-to-make-an-elective-deferral-election-excluding-eligible-employees
9. Internal Revenue Service: Notice 2023-43 — SECURE 2.0 Expansion of EPCRS — https://www.irs.gov/irb/2023-24_IRB

Educational Disclaimer

ROIStreet publishes educational content about retirement-plan qualification, IRS examinations and correction. This article is not legal, tax, actuarial, fiduciary or plan-administration advice. Audit CAP sanctions and correction requirements depend on the actual qualification failure, affected participants, plan history, Maximum Payment Amount, examination facts, prior correction efforts, current IRS guidance, separate tax liabilities and potential Department of Labor issues.

The ROIStreet Reader Promise

We strive to explain before we evaluate, present evidence before opinions, discuss risks alongside potential benefits, distinguish facts from analysis, and correct material errors transparently.

Our purpose is to help readers better understand investing—not to tell them what to do.