What Changed in EPCRS? Rev. Proc. 2026-34 and the New IRA Correction Program

Rev. Proc. 2026-34 is the new version of EPCRS, the IRS system for correcting retirement plan failures. It modifies and supersedes Rev. Proc. 2021-30 and is generally effective October 22, 2026. The biggest change is scope. Self-correction now covers certain Demographic Failures and Employer Eligibility Failures that Rev. Proc. 2021-30 kept out of self-correction entirely, and a plan no longer needs a favorable letter to use it. Separately, Rev. Proc. 2026-33 creates the IRA Compliance Resolution System, a correction program for IRAs that takes effect May 1, 2027.

This matters if you advise a small employer with a 401(k), 403(b), SEP or SIMPLE IRA plan, or an IRA owner with a missed rollover or a provider error on the account. Check each known plan failure against the new deemed-reasonable correction window. Document every self-correction now, because a sponsor Under Examination must produce that file if the IRS asks. And repoint any checklist that still cites Rev. Proc. 2021-30.

What Changed in EPCRS Under Rev. Proc. 2026-34?

EPCRS has three parts: "the Self-Correction Program ("SCP"), the Voluntary Correction Program ("VCP"), and the Audit Closing Agreement Program ("Audit CAP")." Under SCP, a Plan Sponsor with established compliance practices may, "without paying any fee or sanction, correct certain failures." Under VCP, a sponsor not yet Under Examination "may pay a limited fee and receive the IRS's approval for correction." Audit CAP is for failures found on exam, with a sanction.

The update folds in SECURE 2.0 sections 301(b), 305 and 350 and Notices 2023-43, 2024-2 and 2024-77. Section 305 drives most of it: it "generally expands SCP to permit self-correction of Eligible Inadvertent Failures, including loan failures."

The favorable letter rule is gone. Section 2.02(1)(a)(ii) lists the change as "eliminating the requirement that a Qualified Plan or a Section 403(b) Plan be the subject of a favorable letter to use SCP." Under Rev. Proc. 2021-30, section 4.03(1), SCP for certain Plan Document Failures and for significant Operational Failures was available only to a plan that had a Favorable Letter.

Which Failures Can a Plan Sponsor Now Self-Correct?

SCP corrects an Eligible Inadvertent Failure. Section 4.09 defines it as "a Qualification Failure, Section 403(b) Failure, SEP Arrangement Failure, or SIMPLE IRA Plan Failure that occurs despite the existence of practices and procedures that satisfy the standards set forth in section 7.02." It excludes any failure "that is egregious, relates to the diversion or misuse of plan assets, or is directly or indirectly related to an abusive tax avoidance transaction."

Section 7.02 accepts procedures that are "formal or informal," then adds a sentence that will trip up small plans: "A plan document alone does not constitute evidence of established procedures."

Section 4.01(2) sorts Qualification Failures into four types:

• Plan Document Failure: "a plan provision (or the absence of a plan provision) that, on its face, violates the Qualification Requirements," including a Nonamender Failure.
• Operational Failure: a failure that "arises solely from the failure to follow plan provisions."
• Demographic Failure: a failure under section 401(a)(4), 401(a)(26), or 410(b) that is not an Operational or Employer Eligibility Failure.
• Employer Eligibility Failure: a 401(k) plan adopted by "an employer that fails to satisfy the employer eligibility requirements to establish a section 401(k) plan."

Section 2.02(1)(a)(iv) describes the expansion as "permitting self-correction of certain Demographic Failures, Employer Eligibility Failures, and Plan Document Failures," and section 2.02(1)(a)(v) adds "loan failures identified in this revenue procedure." Read those qualifiers literally. Rev. Proc. 2021-30, section 4.06, said that "SCP is not available for a Plan Sponsor to correct Employer Eligibility Failures or Demographic Failures." Now some of them qualify.

Section 7.03 still carves failures out. A failure to initially adopt a written plan stays outside SCP. So does a significant Operational Failure, Plan Document Failure, Employer Eligibility Failure or Demographic Failure in a terminated plan.

How Long Does a Plan Sponsor Have to Self-Correct?

A correction is deemed timely if it is "completed by the later of the last day of the third plan year following the plan year in which the failure occurred or 18 months after identification of the failure by the Plan Sponsor." That is section 7.05(1)(a).

An illustration, with dates that are mine. A calendar-year 401(k) plan missed deferrals in 2025, and the sponsor found it in February 2026. The third-plan-year leg ends December 31, 2028, and the 18-month leg ends in August 2027. The later date controls.

Notice 2023-43 gave only the 18 months. Section 2.02(1)(a)(xiv) adds that the old SCP correction period for significant failures "no longer applies due to the passage of section 305 of the SECURE 2.0 Act."

Employer Eligibility Failures run on a much shorter clock. Section 7.05(1)(c) requires the sponsor to cease "all contributions to the plan as soon as reasonably practicable after the failure is identified, but no later than the last day of the sixth month following the date of identification of the failure."

What Happens to Self-Correction Once the IRS Opens an Examination?

The window closes. Section 7.05(2)(a) says "the SCP correction period ends when the plan or Plan Sponsor comes Under Examination for that year." Under section 4.08, Under Examination includes a sponsor that has received "verbal or written notification" of an impending Employee Plans examination.

After that, section 8.01 allows SCP only if the failure is "insignificant, not excluded under section 7.03, and an Operational Failure," or the sponsor took actions that "demonstrate a specific commitment to implementing correction" before the exam. A routine annual audit does not count, and neither does "a general statement of intent to correct failures when they are discovered."

Insignificance still matters. Section 8.03 weighs factors such as the share of plan assets involved and the years affected, and says "No single factor is determinative." A stricter limit applies to failures the IRS finds in a determination letter application. Under section 9.06(2), the sponsor "may use SCP to correct insignificant Operational Failures," and the Audit CAP sanction generally applies to the rest.

Documentation is the part to start now. Section 7.05(2)(b) lists records that substantiate a self-correction, such as records that:

1. identify the failure, the years it occurred, the number of employees affected and the date it was identified;
2. explain how it occurred and show the practices and procedures in effect at the time;
3. substantiate the correction method and the completion date;
4. identify the procedure changes made so it does not recur.

Build that file when you correct, not after the exam letter.

What Does the IRA Compliance Resolution System Cover?

At this time it covers four IRA failures, through an IRS submission program, starting May 1, 2027. Section 1.05 of Rev. Proc. 2026-34 says the IRS "is opening a separate IRA compliance resolution system that will permit IRA custodians and IRA owners to correct certain failures related to IRAs that are ineligible for resolution under EPCRS." Under Rev. Proc. 2026-33, ICRS "currently consists of the IRA Voluntary Correction Program (IVCP)," and "Self-correction of IRA failures is not available under ICRS at this time." The IRA Custodian or IRA Owner submits, and IRS approval comes as a compliance statement.

Sections 2.15 through 2.18 define the four failures. Three of them turn on who made the mistake:

• RMD Failure: occurs "when, due to a failure by a Service Provider, the amount that is distributed from an IRA Owner's IRA or IRAs during the taxable year is less than the IRA Owner's required minimum distribution (RMD) under section 408(a)(6) or (b)(3)." An owner who simply forgot the RMD does not fit.
• IRA Establishment Failure: the owner asked a Service Provider for a specific type of IRA, but "due to a failure by the Service Provider," the provider set up a different type of IRA or a non-IRA account. No submission is accepted "after December 31 of the year following the year in which the incorrect account was established."
• Nonspouse Beneficiary Distribution or Rollover Failure: "due to an inadvertent error by a Service Provider, a nonspouse beneficiary had reason to believe that a distribution from a decedent's IRA or an Inherited IRA could be rolled over without inclusion of income."
• 60-Day Rollover Failure: a distribution is not rolled over within 60 days "and when the failure to waive the 60-day rollover requirement would be against equity or good conscience." This one needs no Service Provider error, and it reaches qualified plan, 403(b) and governmental 457(b) distributions too.

Section 2.09 defines Service Provider to include "a certified public accountant." A CPA with a service contract or agreement with the IRA Owner, or with respect to the IRA, can be the Service Provider whose error creates one of the first three failures.

The regular IVCP user fee is $3,500 for submissions filed before January 1, 2028. IVCP is "generally not available" if the owner's Form 1040 series return or Form 1041 for any taxable year is Under Examination. Section 4.01(2) of Rev. Proc. 2026-33 warns that a submission "does not extend the statute of limitations on refunds" and points to a protective claim for refund to preserve a refund for a year that closes while the submission is processed. A client waiting for May 2027 has the same exposure.

How Do 60-Day Rollover Waivers Change in 2027 and 2028?

They move to ICRS. Section 1.01 of Rev. Proc. 2026-33 "transitions requests for waivers of the 60-day rollover requirement" from "private letter ruling requests under Rev. Proc. 2026-4" to ICRS, on this timeline: "For 2027, taxpayers may submit requests for waivers of the 60-day rollover requirement under either ICRS or Rev. Proc. 2027-4 (which is expected to be published in 2027-1 IRB). Starting in 2028, it is anticipated that requests for such waivers will only be permitted under ICRS."

For where a letter ruling sits among IRS authorities, see Treasury regs vs revenue rulings vs private letter rulings.

What Should You Do Before January 20, 2027?

Both revenue procedures take comments through January 20, 2027, and Rev. Proc. 2026-33 asks for "comments regarding additional failures that could be corrected in future versions of the program." If an IRA failure your clients keep hitting is missing, say so.

Then work the files. Classify each known plan failure, compute its deemed-reasonable date, and start the documentation. For IRA clients, match each problem to one of the four definitions and watch the refund statute and the IRA Establishment Failure deadline.

When a revenue procedure is this long, I want the definition, the exception and the effective date side by side before I advise. I built Tax Orator to give me that with the citations attached.