IRS Updates and Expands Self-Correction Program for Qualified Plans and 403(b) Plans

On October 22, 2026, the Department of the Treasury and the IRS issued Revenue Procedure 2026-34, a comprehensive update to the Employee Plans Compliance Resolution System (EPCRS) that governs how sponsors of qualified retirement plans and 403(b) plans correct compliance failures. The new guidance is effective immediately and replaces Revenue Procedure 2021-30, the prior comprehensive EPCRS guidance. Consistent with Section 305 of the SECURE 2.0 Act of 2022, the IRS described the update as part of an effort to "simplify and speed up how errors with certain retirement plans and IRAs can get corrected when there is a simple problem." For plan sponsors, the takeaway is a significant expansion of the Self-Correction Program (SCP), the no-fee, no-filing option that allows sponsors to fix eligible failures without formal IRS approval. This article reviews the expanded self-correction options, the deadlines and correction rules that apply, and the practical steps sponsors should consider to preserve access to SCP.

Revenue Procedure 2026-34 formally defines a new, broader category of correctable errors called "Eligible Inadvertent Failures" and removes the long-standing requirement that, in order to have access to SCP, a plan be the subject of a favorable IRS determination, opinion, or advisory letter. Sponsors may now self-correct certain Demographic Failures, Employer Eligibility Failures, and Plan Document Failures that previously required a formal Voluntary Compliance Program (VCP) filing with the IRS, and, for the first time, certain plan loan failures can be self-corrected as well, including defects that previously could only be resolved through VCP.

The revenue procedure also clarifies how long sponsors have to complete a self-correction to satisfy SCP’s requirement that corrections be made within a “reasonable period.” Specifically, a correction satisfies that requirement if it is completed by the later of the last day of the third plan year following the year the failure occurred, or 18 months after the failure is identified. A related, previously temporary safe harbor correction method for missed elective deferrals in plans with automatic enrollment or automatic escalation features has now been made permanent and extended to cover terminated employees.

In addition to expanding access to SCP, the update revises the correction rules sponsors should consider when self-correcting eligible failures. For inadvertent benefit overpayments, the update narrows the circumstances in which sponsors must attempt to obtain repayment as part of the correction. Consistent with Section 301(b) of SECURE 2.0, sponsors are generally no longer required to seek recoupment of an inadvertent overpayment from the recipient, except where the overpayment relates to certain compensation, annual addition, or funding limits, and amounts not recouped can generally be treated as eligible for rollover. Although these changes are not limited to SCP, they are relevant to sponsors evaluating how to correct an eligible overpayment through self-correction. Other changes to correction methods and procedures that may be relevant when using SCP include revised correction principles for failures to obtain spousal consent, updated procedures for locating missing participants, and a new safe harbor correction method for a missed notice of suspension of benefits in a defined benefit plan.

Importantly, once a plan or sponsor comes under IRS examination, the availability of SCP narrows considerably. At that point, SCP generally may only be used for insignificant operational failures or where the sponsor can demonstrate it had already made a specific, documented commitment to self-correct the failure before the examination began. Sponsors should treat this as a reminder that the value of SCP depends on having established, routinely followed compliance practices and procedures in place before a failure is identified, not after.

These changes materially expand the self-correction tools available to plan sponsors, but they also come with new documentation and timing requirements that sponsors will want to build into their compliance practices now. The members of the Bradley Employee Benefits & Executive Compensation Practice Team would welcome the opportunity to review the current correction practices and procedures of your qualified plan or 403(b) plan against the updated EPCRS requirements and to help you take advantage of the expanded self-correction options where appropriate.