To Err Is Human, To Self-Correct Is Now (Mostly) Allowed: IRS Expands Availability of Self-Correction for Qualified Plans

On October 22, 2026, the Internal Revenue Service (IRS) issued Revenue Procedure 2026-34, a comprehensive update to the Employee Plans Compliance Resolution System (EPCRS) that replaces Rev. Proc. 2021-30 and is effective immediately. The new procedure folds in the SECURE 2.0 Act’s correction provisions and the interim guidance issued since its enactment (Notices 2023-43 and 2024-77 and the EPCRS-related portion of Notice 2024-2) and applies to 401(a) qualified plans, 403(b) plans, Simplified Employee Pension plans (SEPs), and Savings Investment Match Plans for Employees (SIMPLE IRA) plans. The bottom line for plan sponsors: More plan errors can now be fixed on your own, without an IRS filing or user fee.

Background

EPCRS has three components: the Self-Correction Program (SCP); the Voluntary Correction Program (VCP), which requires an IRS filing and fee; and the Audit Closing Agreement Program (Audit CAP) for failures found on examination. Under the prior procedure, SCP was narrow. For example, significant operational failures and plan document failures generally required a favorable determination letter, and demographic and employer eligibility failures could not be self-corrected at all. SECURE 2.0 directed the IRS to expand self-correction, and Rev. Proc. 2026-34 is the permanent version of that expansion. The IRS also issued a companion procedure, Rev. Proc. 2026-33, creating a separate correction program for IRAs scheduled to take effect May 1, 2027.

Highlights for Plan Sponsors

• Self-correction for “eligible inadvertent failures.” SCP is now built around failures that occur despite the plan sponsor’s having established practices and procedures, reasonably designed to promote compliance, in place and routinely followed. Egregious failures, diversion or misuse of plan assets, and abusive tax avoidance transactions are excluded from SCP. Within that framework, SCP now reaches certain plan document, demographic, employer eligibility, and plan loan failures, and a favorable determination letter is no longer a prerequisite for self-correcting significant failures.
• More time to correct. A self-correction is deemed timely if completed by the later of the last day of the third plan year following the year of the failure or 18 months after the failure is identified. For employer eligibility failures, contributions generally must stop within six months after identification.
• Less clawback of overpayments. For inadvertent benefit overpayments, plans generally no longer must seek recoupment from participants or make a corrective contribution, and an overpayment for which the plan does not seek recoupment is generally treated as an eligible rollover distribution to the extent it would otherwise qualify (if the plan does seek recoupment, any portion not returned is not eligible for rollover, and the recipient must be so notified). Overpayments resulting from failures to satisfy the limits of Internal Revenue Code sections 401(a)(17), 415, or 436, or made to disqualified persons, remain subject to correction (subject to a $250 per-recipient de minimis exception).
• Auto-enrollment safe harbor made permanent. Missed elective deferrals under automatic contribution features can be corrected without a qualified nonelective contribution if correct deferrals begin by the first payroll after the end of the 9½-month period following the plan year of the failure (or, if earlier, the first payroll after the end of the month following the month in which the employee notified the plan sponsor of the failure), notice is provided to affected employees within 45 days after correct deferrals begin, and missed matching contributions (and related earnings) are made up within a reasonable period (deemed satisfied if made within 12 months after correct deferrals begin, doubled from the six months allowed under Notice 2024-2). The prior sunset is eliminated, and the safe harbor now extends to SEPs, SIMPLE IRA plans, and terminated employees.
• Exam clock still matters. Once a plan is under examination, SCP generally remains available only for insignificant operational failures or where the plan sponsor had already demonstrated a specific commitment to correct. Completing an annual audit or adopting a general intent to correct errors is not enough.

Key Takeaways and Next Steps

• Write down your practices and procedures. Self-correction eligibility hinges on having appropriate practices and procedures in place. Plan sponsors should confirm they have documented processes for tracking eligibility, depositing deferrals, aligning payroll with plan terms, and monitoring loans and that those processes are followed.
• Revisit known and open issues now. Because the new procedure is effective immediately, sponsors should look again at pending corrections and known errors. Some failures that previously required a VCP filing may now be self-correctable, and the correction clock is running, so deadlines should be calendared and corrections made before any exam begins.
• Weigh SCP against VCP. Self-correction comes with no IRS sign-off. Where certainty matters, such as for larger or more complex failures, VCP remains available before an exam and results in an IRS compliance statement.
• Loop in your service providers. Recordkeepers, third-party administrators, and payroll providers are often the source of the error and the first line of defense. Ask how they are applying the new rules, particularly for auto-enrollment corrections.