What Is EPCRS for a 401(k) Plan?

EPCRS is the IRS system that lets a retirement-plan sponsor correct specified qualification failures without treating every mistake as a reason to disqualify the plan.

The acronym stands for:

Employee Plans Compliance Resolution System

For a 401(k) sponsor, EPCRS has three principal routes:^[1][2][3]

1. SCP — Self-Correction Program
2. VCP — Voluntary Correction Program
3. Audit CAP — Audit Closing Agreement Program

The difference is not the type of spreadsheet used to calculate the correction.

It is:

• whether the IRS is involved
• when the error is discovered
• whether the failure is eligible for self-correction
• whether the sponsor wants formal IRS approval
• whether the plan is already under examination
• what fee or sanction applies.

EPCRS Is a Qualification-Preservation System

A qualified 401(k) receives valuable federal tax treatment.

The plan can jeopardize that status by failing to satisfy qualification requirements in:

• its written terms
• plan operation
• nondiscrimination
• eligibility
• vesting
• contribution limits
• distributions
• loans
• other Code requirements.

EPCRS is designed to let sponsors correct many of those failures while preserving tax-favored treatment.^[1][3]

The IRS correction principle is generally to place:

• the plan
• affected participants
• beneficiaries

in the position they would have occupied had the failure not occurred, using a reasonable and appropriate correction method.^[3][7]

That principle explains why corrections often require:

• corrective contributions
• earnings
• distributions
• forfeiture restoration
• retroactive amendments
• testing reruns
• administrative changes.

EPCRS Is Not One Program

Treating EPCRS as a single filing process creates confusion.

All three sit under EPCRS.

They provide different levels of:

• cost
• certainty
• IRS involvement
• flexibility.

SCP Is the Lowest-Friction Route

Under SCP, the sponsor:

• identifies the failure
• determines that self-correction is permitted
• calculates the correction
• makes the correction
• changes procedures where needed
• retains records.

There is:

no VCP application

and:

no IRS user fee.^[5][6]

The IRS does not issue a compliance statement approving the correction.

That last point matters.

SCP can be cheaper and faster than VCP.

It gives the sponsor less formal certainty.

VCP Buys IRS Agreement

Under VCP, the sponsor voluntarily submits the failure and proposed correction to the IRS before the plan comes under examination.^[3][7]

The sponsor:

• files through Pay.gov
• completes Form 8950
• provides supporting correction materials
• pays the applicable user fee
• responds to IRS questions
• receives a compliance statement if the submission is approved.^[7][8][12]

The compliance statement is the core value.

The sponsor gets written IRS agreement to the specified correction.

Audit CAP Is the Expensive End of the Spectrum

Audit CAP applies when significant failures are identified during IRS examination and cannot be resolved through an available self-correction route.^[9]

The sponsor generally:

• corrects the failure
• enters into a closing agreement
• pays a negotiated sanction.

IRS states that the Audit CAP sanction should generally be:

greater than the applicable VCP user fee

while bearing a reasonable relationship to the:

• nature
• extent
• severity

of the failure.^[9]

That creates a deliberate incentive.

Correct before examination if you can.

The Old SCP Explanation Is Incomplete in 2026

A common explanation of SCP says:

• insignificant operational failures can be corrected at any time
• significant operational failures must be corrected by the end of the third plan year after the failure.

That describes the Revenue Procedure 2021-30 framework.^[3][5]

It is no longer the complete current-law explanation.

SECURE 2.0 Section 305 expanded self-correction for:

eligible inadvertent failures.^[4]

Notice 2023-43 provides interim IRS guidance for that expanded framework.^[4]

What Is an Eligible Inadvertent Failure?

SECURE 2.0 defines an eligible inadvertent failure around two concepts.

The failure was inadvertent

The problem occurred despite the sponsor having established practices and procedures reasonably designed to promote and facilitate compliance.^[4]

The failure is not in a prohibited category

The failure cannot be:

• egregious
• related to diversion or misuse of plan assets
• directly or indirectly related to an abusive tax-avoidance transaction.^[4]

This is why:

"We made a mistake"

is not enough for SCP.

The sponsor needs to show there was a functioning compliance structure and the error occurred despite it.

Practices and Procedures Are a Gate

Notice 2023-43 retains the Revenue Procedure 2021-30 requirement that a plan sponsor have:

established practices and procedures

reasonably designed to promote compliance.^[4]

The procedures can be:

• formal
• informal

but they need to exist and be meaningful.

Examples can include:

• eligibility reconciliation
• payroll-to-recordkeeper controls
• contribution-limit monitoring
• HCE ownership data review
• annual plan-document-to-payroll mapping
• distribution approval procedures
• loan administration controls
• rehire review.

A plan cannot create its first compliance procedure after an error and then claim the failure occurred despite an existing control system.

A Written Procedure Is Not Enough

A 40-page administration manual that nobody follows is weak evidence.

The sponsor should be able to show:

• what control existed
• who performed it
• when it was performed
• what data it used
• why the failure escaped that control
• what changed after discovery.

SCP is not built on paper alone.

It is built on actual compliance practices.

SECURE 2.0 Changed the Time Question

Under the old significant-failure framework, sponsors often asked:

"How many plan years ago did this happen?"

Under the current eligible-inadvertent-failure framework, that is no longer the first question.

Notice 2023-43 says the SECURE 2.0 correction period is generally:

indefinite

for an eligible inadvertent failure, subject to important conditions.^[4]

The sponsor must:

• act before the IRS cuts off self-correction under the examination rule
• complete correction within a reasonable period after identifying the failure.^[4]

The analysis has shifted from:

age of error

toward:

eligibility + identification + action + completion.

The 18-Month Rule Is a Safe Point, Not Permission to Wait

Notice 2023-43 provides a practical rule for most eligible inadvertent failures.

Except for the special employer-eligibility rule, a correction completed by the:

last day of the 18th month following the date the sponsor identifies the failure

is treated as completed within a reasonable period.^[4]

Example:

Failure identified:

February 10, 2026

Eighteenth month after February 2026:

August 2027

Correction completed by:

August 31, 2027

The sponsor receives the Notice 2023-43 deemed-reasonable timing treatment, assuming the other SCP conditions are met.

That does not mean every sponsor should wait 18 months.

The longer the sponsor waits:

• the harder earnings become to calculate
• more participants can terminate
• distributions can occur
• mergers can complicate data
• an IRS examination can begin.

The 18-month point is a legal timing benchmark.

It is not an operating target.

Employer Eligibility Failures Have a Different Clock

Notice 2023-43 gives employer eligibility failures a tighter rule.^[4]

To receive the specified reasonable-period treatment, the sponsor must generally cease all contributions:

as soon as reasonably practicable

and no later than:

the last day of the sixth month after the failure is identified.^[4]

That is materially different from the 18-month framework.

A sponsor should identify the failure type before putting a correction date on the calendar.

Examination Can Shut the Door

The SECURE 2.0 expansion is not a license to begin self-correction after the IRS identifies the problem.

Notice 2023-43 says an eligible inadvertent failure is generally treated as identified by the Secretary when:

the plan or plan sponsor comes under examination

under the applicable EPCRS definition.^[4]

Once that occurs, the failure is generally no longer available for eligible-inadvertent-failure self-correction unless the sponsor had already taken actions showing a:

specific commitment to implement self-correction.^[4]

That phrase matters.

"We Planned to Fix Errors" Is Not a Specific Commitment

Notice 2023-43 explicitly says the following are not enough by themselves:^[4]

• completing an annual compliance audit
• adopting a general statement that failures will be corrected when found.

A specific commitment requires facts showing the sponsor is:

actively pursuing correction of the particular identified failure.^[4]

Examples of stronger evidence can include:

• affected population identified
• correction method selected
• earnings calculation underway
• TPA instructed to calculate corrective contributions
• payroll implementation date scheduled
• participant notice drafted
• corrective deposit authorized.

The file should show action.

Not intention.

Example: Sponsor Beats the Examination Cutoff

Plan sponsor identifies a compensation-definition error:

May 1, 2026

By May 20:

• affected employees identified
• correction methodology approved
• TPA calculates missed allocations
• finance approves funding.

IRS examination notice arrives:

June 1, 2026

The sponsor may have strong evidence of a specific commitment to implement correction before examination.

Contrast that with:

May 1 — email says "we should look into this."

No analysis.

No population.

No method.

No correction activity.

That is a much weaker position.

Insignificant Failures Have a Separate Examination Rule

Notice 2023-43 preserves a notable exception.

A plan sponsor may self-correct an:

insignificant failure

under the Revenue Procedure 2021-30 factors even if:

• the plan is under examination
• the failure is discovered during examination.^[4]

That does not mean every small-dollar issue is insignificant.

Revenue Procedure 2021-30 uses facts and circumstances, including factors such as:

• percentage of plan assets and contributions involved
• number of affected participants
• duration
• reason
• correction history.^[3]

No single factor automatically decides significance.

SECURE 2.0 Did Not Make Every Failure Self-Correctable

Notice 2023-43 lists failures that remain unavailable for eligible-inadvertent-failure SCP under the interim framework.^[4]

For a 401(k) sponsor, the most relevant include:

Failure to initially adopt a written plan

If there was no timely written plan at all, the sponsor cannot use this SCP expansion to create one retroactively.^[4]

Failure in an orphan plan

The interim guidance excludes orphan-plan failures.^[4]

Significant failure in a terminated plan

A significant failure in a terminated plan is not eligible under the current interim SCP rule.^[4]

Certain demographic failures using an impermissible correction

A demographic failure can be self-correctable only using the permitted regulatory correction structure specified by the guidance.^[4]

Retroactive amendment that makes participants worse off

The sponsor cannot self-correct an operational failure by rewriting the plan to match prior operation when the amendment is less favorable to a participant or beneficiary than the original terms.^[4]

That last restriction matters.

A plan sponsor cannot solve:

"we paid less than the document promised"

by changing the document after the fact to promise less.

Egregious Failures Are Outside the Framework

The eligible-inadvertent-failure definition excludes egregious failures.^[4]

Egregious is not merely:

large dollar amount.

Revenue Procedure 2021-30 looks to the character and severity of the failure.^[3]

A repeated, systemic or abusive pattern can raise concerns even if the sponsor calls it administrative.

The correction program is designed to encourage genuine voluntary compliance.

Not to legalize intentional noncompliance after discovery.

Misuse of Plan Assets Is Different

SECURE 2.0 also excludes failures relating to:

diversion or misuse of plan assets.^[4]

That limitation matters because plan-asset misuse can implicate:

• fiduciary law
• prohibited transactions
• excise taxes
• DOL enforcement
• criminal rules in extreme cases.

EPCRS is not a shield for asset diversion.

SCP Does Not Produce an IRS Approval Letter

Assume the sponsor correctly uses SCP.

What does the IRS send?

Nothing.

There is no SCP compliance statement.

There is no approval letter.

There is no filing receipt because there was no filing.

The sponsor's protection comes from:

• eligibility for SCP
• correct application of the correction rules
• documentation proving what was done.

That is why SCP documentation needs to be stronger than:

"TPA said it was fixed."

What an SCP File Should Contain

Notice 2023-43 says the sponsor must be able to substantiate self-correction if requested on examination.^[4]

A strong file should identify:

1. failure - what happened - applicable Code/plan provision

2. years of occurrence - start date - end date

3. affected population - employee count - participant list

4. date identified - critical for reasonable-period analysis

5. cause - payroll configuration? - HR classification? - document setup? - vendor data?

6. pre-existing compliance procedures - what should have prevented the failure

7. correction methodology - statute, regulation, Revenue Procedure or IRS method used

8. calculations - principal - earnings - testing

9. completion date - when money moved - when amendment adopted - when distributions made

10. preventive change - what was changed so the failure does not recur.

A correction without a file is difficult to defend years later.

VCP Is Not "SCP With a Fee"

VCP changes the relationship with the IRS.

Under SCP:

sponsor concludes the correction is valid.

Under VCP:

IRS reviews the disclosed failure and correction.

The IRS can:

• ask questions
• require modification
• request additional documents
• issue a compliance statement.

That formal review can be worth paying for when:

• eligibility for SCP is uncertain
• correction methodology is unusual
• dollar exposure is large
• participants are materially affected
• a business transaction is pending
• buyer diligence requires certainty
• board or fiduciary committee wants IRS closure.

A Sponsor Can Use VCP Even When SCP May Be Available

Notice 2023-43 explicitly says a sponsor may submit an eligible inadvertent failure to VCP.^[4]

That means the decision is not always:

SCP allowed → SCP required.

A sponsor can prefer VCP because it wants:

IRS agreement

rather than relying only on its own interpretation.

The trade-off is:

• user fee
• preparation cost
• disclosure to IRS
• processing time.

VCP Must Be Filed Before Examination

VCP is a voluntary pre-examination route.^[3][7]

Once the plan is under examination under the applicable rules, the sponsor generally cannot start a VCP filing for the audited failure.

That creates a real timing decision.

If the sponsor knows about a difficult failure and wants IRS approval:

waiting has downside.

VCP Submissions Use Pay.gov

Current IRS procedure directs VCP submissions through:

Pay.gov^[7][12]

using:

Form 8950 — Application for Voluntary Correction Program

with supporting documents describing:

• plan
• failures
• affected years
• correction method
• calculations
• administrative changes
• requested relief where applicable.

IRS also provides Form 14568 model compliance-statement materials and issue-specific schedules for common failures.^[7]

VCP Is No Longer Anonymous

Revenue Procedure 2021-30 eliminated anonymous VCP submissions effective January 1, 2022.^[3]

A sponsor filing VCP identifies itself.

The IRS does permit a qualifying:

anonymous, no-fee pre-submission conference

to discuss certain issues before a formal VCP filing.^[3]

If the sponsor later files VCP:

the actual submission is not anonymous.

This is useful for unusual correction-method questions.

It is not an anonymous approval process.

2026 VCP Fees Increased

For regular VCP submissions made on or after January 1, 2026, the IRS fee schedule is:^[8][11]

The fee is based on:

plan assets

not:

• number of affected employees
• amount of corrective contribution
• years involved
• perceived seriousness.

Professional fees for attorneys, TPAs or consultants are separate.

Example: $350,000 Plan

Plan assets:

$350,000

2026 regular VCP fee:

$2,000^[8][11]

Suppose the actual correction requires only:

$1,200

of missed matching contributions.

The VCP fee can exceed the correction principal.

That can make SCP economically attractive if SCP is clearly available.

If SCP eligibility is uncertain, the $2,000 can still be cheap relative to qualification risk.

Example: $4 Million Plan

Plan assets:

$4 million

2026 regular VCP fee:

$3,500^[8][11]

The fee remains $3,500 whether the disclosed correction involves:

• $5,000
• $50,000
• $500,000

subject to special procedures and the IRS's authority in unusual cases.

The fee buys review.

It does not measure damage.

VCP Can Address Tax Relief Requests SCP Cannot Automatically Deliver

Notice 2023-43 makes an important point.

Self-correction of an eligible inadvertent failure does not automatically waive:

• excise taxes
• additional taxes

that independently apply to the failure.^[4]

The notice says a sponsor may request through VCP that the IRS not pursue certain excise or additional taxes when Revenue Procedure 2021-30 permits that relief.^[4]

So a failure can be:

successfully self-corrected for qualification

and still create a separate tax problem.

The sponsor should identify both.

Example: Qualification Fixed, Excise Tax Remains

Assume a 401(k) sponsor corrects an eligible inadvertent operational failure under SCP.

The same facts trigger a separate Code excise tax.

The sponsor cannot assume:

"EPCRS fixed it, so the tax vanished."

Notice 2023-43 is explicit that SCP does not automatically waive those taxes.^[4]

That may influence whether the sponsor:

• pays the tax
• files a required excise-tax return
• seeks permitted VCP relief
• pursues a separate closing agreement.

One error can live in more than one legal system.

Audit CAP Begins Where Voluntary Leverage Ends

If the IRS finds a significant qualification failure during examination and SCP is not available, Audit CAP can preserve qualified status.^[9]

The sponsor:

• corrects the failure
• negotiates with the IRS
• pays a sanction
• signs a closing agreement.

The IRS looks at facts and circumstances in setting the sanction.^[9]

Relevant factors include:

• internal controls
• affected employee count
• impact on NHCEs
• duration
• reason for failure
• type of failure
• correction completed before audit
• maximum payment exposure.^[9]

A sponsor that already corrected part of the problem can be in a better position than one that did nothing.

Audit CAP Is Not a Fixed-Fee Menu

VCP has published asset-based user fees.

Audit CAP does not work that way.

The sanction is negotiated.^[9]

IRS policy states that it should generally exceed the VCP user fee but should not be excessive and should bear a reasonable relationship to the failure.^[9]

That uncertainty is itself a cost.

The sponsor has less control over:

• timing
• correction structure
• negotiation
• sanction.

Correction Economics Favor Earlier Action

Consider the same underlying failure.

Correct under SCP

IRS user fee:

$0

Sponsor still pays:

• correction amount
• earnings
• professional costs.

Submit under VCP

IRS user fee in 2026:

$2,000 to $4,000 for a regular filing, depending on plan assets.^[8]

Plus:

• correction
• earnings
• professional costs.

Wait for Audit CAP

Potentially:

• correction
• earnings
• professional costs
• negotiated IRS sanction
• examination burden.

That does not mean SCP is always the right answer.

It explains why unresolved known failures become more expensive as the sponsor moves down the correction ladder.

EPCRS Does Not Replace the Plan Document

A sponsor cannot choose a correction method before determining what the plan actually required.

Example:

Payroll used:

50% match on first 6%

Plan document required:

100% match on first 4%

The first task is not:

"Which EPCRS program should we use?"

The first task is:

• reconstruct the written formula
• calculate correct participant benefits
• identify who was overpaid or underpaid
• identify years
• determine tax and testing effects.

Then choose the correction route.

EPCRS governs the correction process.

The plan document defines the original promise.

EPCRS Does Not Replace Statutory Correction Windows

Some failures have specific Code or regulatory correction periods outside the general EPCRS framework.

Examples include:

• Section 402(g) excess deferrals
• ADP/ACP statutory correction periods
• certain automatic-enrollment implementation errors
• required minimum distribution rules.

The sponsor should use the specific statutory correction mechanism when it remains available and appropriate.

EPCRS often becomes important when:

• the ordinary deadline passed
• the failure is broader
• the statutory correction was incomplete
• the plan needs qualification relief.

INV-100, INV-108 and INV-109 cover examples.

EPCRS Does Not Automatically Fix DOL Fiduciary Violations

EPCRS is an IRS retirement-plan qualification correction system.

The Department of Labor enforces ERISA fiduciary rules.

A failure such as late deposit of participant deferrals can create:

• plan qualification considerations
• prohibited transaction concerns
• fiduciary issues
• excise-tax exposure.

DOL has separate correction mechanisms, including its Voluntary Fiduciary Correction Program for qualifying fiduciary violations.

A sponsor should not assume:

EPCRS correction = DOL closure.

The same facts can require separate federal correction tracks.

EPCRS Does Not Erase Form 5330

Certain failures trigger excise taxes reported on:

Form 5330

Examples can include:

• late ADP/ACP correction
• prohibited transactions
• nondeductible contributions
• other specified Code violations.

If the underlying tax applies, correcting plan qualification under EPCRS does not automatically remove the return or payment obligation.^[4]

The correction memo should have a separate line:

Tax consequence outside EPCRS?

That question prevents unpleasant surprises.

A Favorable Determination Letter Is Not Operational Insurance

A favorable determination or opinion letter generally addresses whether the plan's written terms satisfy applicable qualification rules for the relevant scope.

It does not prove the employer:

• enrolled employees on time
• used correct compensation
• made correct match
• applied correct vesting
• passed testing
• administered distributions correctly.

Operational failure is why EPCRS exists.

A legally compliant document can be administered badly.

Example: Five-Year-Old Compensation Error

Plan document includes bonuses in match compensation.

Payroll excluded bonuses for:

2021–2025

Sponsor discovers the error:

February 2026

Before SECURE 2.0, a sponsor might focus immediately on whether the failure fell outside the old significant-operational-failure SCP period.

Under the current interim framework, the better analysis is:

1. eligible inadvertent failure?
2. established compliance practices?
3. non-egregious?
4. no asset misuse?
5. no abusive transaction?
6. correction permitted?
7. sponsor identified failure before examination?
8. specific correction action begun?
9. correction completed within reasonable period?

If those conditions are met, age alone does not automatically defeat SCP.^[4]

Example: Internal Audit Is Not Enough

Sponsor conducts annual plan audit:

March 2026

Report notes:

"Review compensation coding."

No specific failure is identified.

No participant population is calculated.

No correction begins.

IRS examination starts:

June 2026

Sponsor later says:

"We had already committed to correct anything the audit found."

Notice 2023-43 says a general compliance audit or general statement of intent does not by itself establish a specific commitment to correct a particular eligible inadvertent failure.^[4]

That distinction can determine whether SCP remains available.

Example: Specific Commitment Before Examination

Sponsor discovers a late-entry error:

April 1

By April 15:

• participants identified
• missed deferrals calculated
• corrective contribution method selected
• finance approves deposit
• notice draft prepared.

IRS examination begins:

May 1

Those facts are materially stronger evidence that the sponsor was actively pursuing correction before examination.

Documentation dates matter.

Example: Sponsor Chooses VCP Anyway

A plan has:

$450,000

in assets.

Sponsor identifies an unusual demographic failure.

Counsel believes self-correction may be available but the correction method is not routine.

The company is preparing to sell.

Buyer diligence wants certainty.

Sponsor files VCP before examination.

2026 IRS user fee:

$2,000^[8][11]

The sponsor pays for an IRS compliance statement because transaction certainty is worth more than the fee.

SCP availability does not make VCP irrational.

Example: Audit CAP

IRS examination identifies a significant operational failure.

Sponsor had not identified it and did not begin correction.

SCP is not available for the failure under the applicable examination rule.

The sponsor corrects affected accounts.

IRS and sponsor negotiate a sanction.

They execute a closing agreement.

That is Audit CAP.^[9]

The sponsor still preserves the plan's tax-qualified status.

But it reached the correction system at its most expensive stage.

SCP vs. VCP vs. Audit CAP

The most important difference is not:

small error vs. large error.

It is the legal route available when the sponsor acts.

Old SCP Framework vs. Current Eligible-Inadvertent-Failure Framework

This is why a 2026 article should not stop at:

"significant failures get three years."

What to Ask Before Choosing an EPCRS Route

1. What exactly failed?

• plan document
• operation
• demographics
• employer eligibility
• loan
• distribution
• contribution limit
• testing
• vesting.

2. When did it happen?

Build a year-by-year timeline.

3. When was it identified?

This can drive current SCP timing.

4. What controls existed?

Document actual practices and procedures.

5. Is it an eligible inadvertent failure?

Screen:

• egregious?
• asset misuse?
• abusive transaction?
• excluded category?

6. Is the plan under examination?

Do not assume the answer from whether an agent has physically visited.

Use the applicable EPCRS examination definition.

7. Has the sponsor already shown a specific commitment to correct?

Document concrete steps.

8. Is there a specific statutory correction mechanism still available?

Use it where appropriate.

9. Does the sponsor want IRS approval?

If yes, VCP may have value even if SCP is plausible.

10. Are there separate taxes or DOL issues?

Keep those tracks separate.

The EPCRS Correction File

A mature correction file should contain:

The goal is not to produce a thick file.

It is to make every material conclusion reproducible.

Frequently Asked Questions

What does EPCRS stand for?

Employee Plans Compliance Resolution System.

What are the three EPCRS programs?

SCP, VCP and Audit CAP.^[1][2][3]

What is SCP?

The Self-Correction Program allows qualifying plan failures to be corrected without an IRS filing or user fee.^[5][6]

What is VCP?

The Voluntary Correction Program allows a sponsor to disclose a failure to the IRS before examination, pay a user fee and obtain IRS approval of the correction through a compliance statement.^[7]

What is Audit CAP?

The Audit Closing Agreement Program permits specified failures identified during examination to be corrected through a closing agreement and negotiated sanction.^[9]

Is Rev. Proc. 2021-30 still the EPCRS procedure in 2026?

As of August 2026, IRS public materials continue to identify Revenue Procedure 2021-30 as the published EPCRS procedure and Notice 2023-43 as the interim SECURE 2.0 self-correction guidance.^[1][4][10]

Did SECURE 2.0 eliminate the three-year SCP rule?

For an eligible inadvertent failure, Notice 2023-43 says the old fixed significant-failure correction period does not apply under the interim SECURE 2.0 framework.^[4]

Other SCP rules and special correction regimes still matter.

How long do I have after discovering an eligible inadvertent failure?

Notice 2023-43 generally treats correction completed by the last day of the 18th month after identification as within a reasonable period, except for the special employer-eligibility rule.^[4]

Can an old error still be self-corrected?

Potentially.

Age alone does not automatically bar SCP for an eligible inadvertent failure under the current SECURE 2.0 framework.

The sponsor still must satisfy the eligibility, practices-and-procedures, examination and reasonable-period conditions.^[4]

Can I self-correct after the IRS starts an audit?

It depends.

An eligible inadvertent failure is generally cut off when the plan or sponsor comes under examination unless the sponsor already demonstrated a specific commitment to implement correction.

Insignificant failures can have separate self-correction treatment.^[4]

Does an annual plan audit count as a specific commitment?

Not by itself.

Notice 2023-43 says merely completing an annual compliance audit is not enough.^[4]

Does SCP require paperwork filed with the IRS?

No.

But the sponsor should maintain detailed documentation proving eligibility and correction.^[4][5]

Can I file VCP even if SCP is available?

Yes.

A sponsor may choose VCP to obtain IRS approval.^[4][7]

How much does VCP cost in 2026?

For regular submissions:

• $2,000 for plan assets up to $500,000
• $3,500 for assets over $500,000 through $10 million
• $4,000 for assets over $10 million.^[8][11]

Is VCP anonymous?

No.

Anonymous VCP submissions were eliminated effective January 1, 2022.

A qualifying anonymous no-fee pre-submission conference may still be available.^[3]

Does EPCRS waive excise taxes?

Not automatically.

Notice 2023-43 specifically states that self-correction does not automatically waive applicable excise or additional taxes.^[4]

Does EPCRS fix DOL fiduciary violations?

Not by itself.

EPCRS is an IRS qualification correction system. DOL fiduciary issues can require separate analysis and correction.

Is Audit CAP just VCP after the audit begins?

No.

Audit CAP involves examination, correction, a negotiated sanction and a closing agreement.^[9]

The ROIStreet EPCRS Decision Sequence

Use this order:

Define the failure → reconstruct correct plan operation → identify affected years and participants → document pre-existing compliance practices → test eligible-inadvertent-failure status → screen excluded failure categories → identify date sponsor discovered the failure → determine examination status → document specific commitment to correct → test reasonable-period timing → identify any specific statutory correction method → choose SCP or VCP before audit if available → correct principal + earnings + testing → address separate tax/DOL consequences → retain the full correction file

The shortcut to avoid is:

"It is an operational mistake, so we have three years."

That can be stale analysis.

In 2026, EPCRS is best understood as a timing-and-certainty ladder: self-correct a qualifying failure promptly, use VCP when IRS approval is worth the cost, and avoid letting a known failure reach Audit CAP if a voluntary route is still open.

Sources & References

1. Internal Revenue Service: Correcting Plan Errors — Fix Plan Errors — https://www.irs.gov/retirement-plans/correcting-plan-errors-fix-plan-errors
2. Internal Revenue Service: EPCRS Overview — https://www.irs.gov/retirement-plans/epcrs-overview
3. Internal Revenue Service: Revenue Procedure 2021-30 — Employee Plans Compliance Resolution System — https://www.irs.gov/irb/2021-31_IRB
4. Internal Revenue Service: Notice 2023-43 — SECURE 2.0 Expansion of EPCRS — https://www.irs.gov/irb/2023-24_IRB
5. Internal Revenue Service: Correcting Plan Errors — Self-Correction Program General Description — https://www.irs.gov/retirement-plans/correcting-plan-errors-self-correction-program-scp-general-description
6. Internal Revenue Service: Self-Correction Program FAQs — https://www.irs.gov/retirement-plans/self-correction-program-scp-faqs
7. Internal Revenue Service: Voluntary Correction Program — General Description — https://www.irs.gov/retirement-plans/voluntary-correction-program-general-description
8. Internal Revenue Service: Voluntary Correction Program Fees — https://www.irs.gov/retirement-plans/voluntary-correction-program-vcp-fees
9. Internal Revenue Service: Audit Closing Agreement Program — General Description — https://www.irs.gov/retirement-plans/audit-closing-agreement-program-audit-cap-general-description
10. Internal Revenue Service: Internal Revenue Bulletin 2026-01 — https://www.irs.gov/irb/2026-01_IRB
11. Internal Revenue Service: Employee Plans News — 2026 VCP User Fee Changes — https://www.irs.gov/retirement-plans/employee-plans-news
12. Internal Revenue Service: Instructions for Form 8950 — https://www.irs.gov/instructions/i8950

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ROIStreet publishes educational content about retirement-plan compliance and correction. This article is not legal, tax, actuarial, fiduciary or plan-administration advice. EPCRS eligibility depends on the failure type, plan document, correction method, affected participants, compliance practices, discovery date, examination status, sponsor actions, current IRS guidance, related excise taxes and potential Department of Labor issues.

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