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Rev. Proc. 2021- 30 TABLE OF CONTENTS PART I. …

Rev. Proc. 2021- 30 Page 1 of 140 TABLE OF CONTENTS PART I. INTRODUCTION TO EMPLOYEE PLANS compliance RESOLUTION SYSTEM .. 6 SECTION 1. PURPOSE AND OVERVIEW .. 6 .01 Purpose .. 6 .02 General principles underlying EPCRS .. 6 .03 7 SECTION 2. EFFECT OF THIS REVENUE PROCEDURE ON PROGRAMS .. 7 .01 Effect on programs .. 7 .02 Correction of Overpayment (defined benefit plans) .. 8 .03 Description of other modifications .. 10 .04 Future enhancements .. 11 PART II. PROGRAM EFFECT AND ELIGIBILITY .. 11 SECTION 3. EFFECT OF EPCRS; RELIANCE .. 11 .01 Effect of EPCRS on retirement plans .. 11 .02 compliance statement .. 12 .03 Excise and other taxes .. 12 .04 12 SECTION 4. PROGRAM ELIGIBILITY .. 12 .01 EPCRS Programs .. 12 .02 Effect of examination.

system, the Employee Plans Compliance Resolution System (“EPCRS”), permits Plan Sponsors to correct these failures and thereby continue to provide their employees with retirement benefits on a tax-favored basis. The components of EPCRS are the Self-Correction Program (“SCP”), the Voluntary Correction Program (“VCP”), and the Audit

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Transcription of Rev. Proc. 2021- 30 TABLE OF CONTENTS PART I. …

1 Rev. Proc. 2021- 30 Page 1 of 140 TABLE OF CONTENTS PART I. INTRODUCTION TO EMPLOYEE PLANS compliance RESOLUTION SYSTEM .. 6 SECTION 1. PURPOSE AND OVERVIEW .. 6 .01 Purpose .. 6 .02 General principles underlying EPCRS .. 6 .03 7 SECTION 2. EFFECT OF THIS REVENUE PROCEDURE ON PROGRAMS .. 7 .01 Effect on programs .. 7 .02 Correction of Overpayment (defined benefit plans) .. 8 .03 Description of other modifications .. 10 .04 Future enhancements .. 11 PART II. PROGRAM EFFECT AND ELIGIBILITY .. 11 SECTION 3. EFFECT OF EPCRS; RELIANCE .. 11 .01 Effect of EPCRS on retirement plans .. 11 .02 compliance statement .. 12 .03 Excise and other taxes .. 12 .04 12 SECTION 4. PROGRAM ELIGIBILITY .. 12 .01 EPCRS Programs .. 12 .02 Effect of examination.

2 13 .03 SCP eligibility requirements relating to plan documents .. 13 .04 Established practices and procedures .. 14 .05 Correction by plan amendment .. 15 .06 Availability of correction for Employer Eligibility Failures and Demographic Failures .. 16 .07 Availability of correction for a terminated plan .. 16 .08 Availability of correction for an Orphan Plan .. 16 .09 Availability of correction for 457(b) plans .. 17 .10 Egregious failures .. 17 .11 Diversion or misuse of plan assets .. 17 .12 Abusive tax avoidance transactions .. 18 Rev. Proc. 2021- 30 Page 2 of 140 PART III. DEFINITIONS, CORRECTION PRINCIPLES, AND RULES OF GENERAL APPLICABILITY .. 19 SECTION 5. DEFINITIONS .. 19 .01 Definitions for Qualified Plans .. 19 .02 Definitions for 403(b) Plans.

3 23 .03 Definitions for Orphan Plans .. 26 .04 Earnings .. 26 .05 IRA .. 26 .06 SEP .. 26 .07 SIMPLE IRA Plan .. 27 .08 Under Examination .. 27 SECTION 6. CORRECTION PRINCIPLES AND RULES OF GENERAL APPLICABILITY .. 28 .01 Correction principles; rules of general applicability .. 28 .02 Correction principles .. 28 .03 Correction of an Employer Eligibility Failure .. 35 .04 Correction of a failure to obtain spousal consent .. 36 .05 Determination letter application not permitted .. 37 .06 Special rules relating to Excess Amounts .. 38 .07 Correction of plan loan failures .. 43 .08 Correction under statute or regulations .. 45 .09 Matters subject to excise or other taxes .. 46 .10 Correction for 403(b) Plans .. 47 .11 Correction for SEPs and SIMPLE IRA Plans.

4 48 .12 Confidentiality and disclosure .. 50 .13 No effect on other law .. 50 PART IV. SELF-CORRECTION (SCP) .. 51 SECTION 7. AVAILABILITY OF SCP FOR CERTAIN OPERATIONAL FAILURES AND PLAN DOCUMENT FAILURES .. 51 .01 In 51 .02 Operational Failures .. 51 .03 Plan Document Failures .. 51 SECTION 8. SELF-CORRECTION OF INSIGNIFICANT OPERATIONAL FAILURES 52 .01 Requirements .. 52 .02 52 .03 Multiple failures .. 52 .04 Examples .. 52 Rev. Proc. 2021- 30 Page 3 of 140 SECTION 9. SELF-CORRECTION OF CERTAIN SIGNIFICANT OPERATIONAL FAILURES AND PLAN DOCUMENT FAILURES .. 54 .01 Requirements .. 54 .02 Correction period .. 54 .03 Substantial completion of correction .. 54 .04 Examples .. 55 PART V. VOLUNTARY CORRECTION PROGRAM WITH IRS APPROVAL (VCP).

5 56 SECTION 10. VCP PROCEDURES .. 56 .01 VCP pre-submission conference .. 56 .02 VCP requirements .. 57 .03 Identification of failures .. 57 .04 Effect of VCP submission on examination .. 57 .05 No concurrent examination activity .. 57 .06 Determination letter applications not related to a VCP submission .. 58 .07 Processing of submission .. 58 .08 compliance statement .. 61 .09 Effect of compliance statement on examination .. 63 .10 Anonymous submissions not permitted .. 63 .11 Special rules relating to group 63 .12 Multiemployer and multiple employer plans .. 65 SECTION 11. SUBMISSION PROCEDURES FOR VCP .. 65 .01 General rules .. 65 .02 Submission of model forms .. 66 .03 Mandatory Submission Process using the website .. 67 .04 PDF file submission CONTENTS .

6 68 .05 User fee due at the time of VCP submission using the website .. 71 .06 Additional user fee due for group submissions .. 71 .07 Additional amounts due for certain submissions .. 71 .08 Power of attorney requirements .. 71 .09 Acknowledgement of filing .. 72 .10 Maintenance of copies of submissions .. 72 .11 Assembling the submission .. 72 SECTION 12. VCP USER FEES .. 74 .01 User fees .. 74 Rev. Proc. 2021- 30 Page 4 of 140 PART VI. CORRECTION ON audit ( audit CAP) .. 74 SECTION 13. DESCRIPTION OF audit CAP .. 74 .01 audit CAP requirements .. 74 .02 Payment of sanction .. 74 .03 Additional requirements .. 75 .04 Failure to reach resolution .. 75 .05 Effect of closing agreement .. 75 .06 Other procedural rules .. 75 SECTION 14.

7 audit CAP SANCTION .. 75 .01 Determination of sanction .. 75 .02 Factors considered .. 75 .03 Transferred Assets .. 77 .04 Sanction for Nonamender Failures discovered during the determination letter application process .. 77 PART VII. EFFECT ON OTHER DOCUMENTS; EFFECTIVE DATE; PAPERWORK REDUCTION ACT .. 78 SECTION 15. EFFECT ON OTHER 78 SECTION 16. EFFECTIVE DATE .. 78 SECTION 17. PUBLIC COMMENTS .. 79 SECTION 18. PAPERWORK REDUCTION ACT .. 79 DRAFTING INFORMATION .. 80 APPENDIX A .. 81 OPERATIONAL FAILURES AND CORRECTION METHODS .. 81 .01 General rule .. 81 .02 Failure to properly provide the minimum top-heavy benefit under 416 to non-key employees .. 82 .03 Failure to satisfy the ADP test set forth in 401(k)(3), the ACP test set forth in 401(m)(2), or, for plan years beginning on or before December 31, 2001, the multiple use test of 401(m)(9).

8 82 .04 Failure to distribute elective deferrals in excess of the 402(g) limit (in contravention of 401(a)(30)) .. 82 .05 Exclusion of an eligible employee from all contributions or accruals under the plan for one or more plan years.. 83 Rev. Proc. 2021- 30 Page 5 of 140 .06 Failure to timely pay the minimum distribution required under 401(a)(9) .. 93 .07 Failure to obtain participant or spousal consent for a distribution subject to the participant and spousal consent rules under 401(a)(11), 411(a)(11), and 417 .. 93 .08 Failure to satisfy the 415 limits in a defined contribution plan .. 94 .09 Orphan Plans; orphan contracts and other assets .. 95 APPENDIX B .. 97 CORRECTION METHODS AND EXAMPLES; EARNINGS ADJUSTMENT METHODS AND EXAMPLES.

9 97 SECTION 1. PURPOSE, ASSUMPTIONS FOR EXAMPLES AND SECTION REFERENCES .. 97 .01 Purpose .. 97 .02 Assumptions for Examples .. 97 .03 Designated Roth contributions .. 98 .04 Section references .. 98 SECTION 2. CORRECTION METHODS AND EXAMPLES .. 98 .01 ADP/ACP Failures .. 98 .02 Exclusion of Otherwise Eligible Employees .. 101 .03 Vesting Failures .. 117 .04 Section 415(c) Failures and Correction of Overpayments (Defined Contribution Plans and 403(b) Plans) .. 119 .05 Section 415(b) Failures and Correction of Overpayments (Defined Benefit Plans) .. 121 .06 401(a)(17) Failures .. 129 .07 Correction by Amendment .. 130 SECTION 3. EARNINGS ADJUSTMENT METHODS AND EXAMPLES .. 133 .01 Earnings Adjustment Methods .. 133 .02 Examples .. 136 Rev.

10 Proc. 2021- 30 Page 6 of 140 PART I. INTRODUCTION TO EMPLOYEE PLANS compliance RESOLUTION SYSTEM SECTION 1. PURPOSE AND OVERVIEW .01 Purpose. This revenue procedure updates the comprehensive system of correction programs for sponsors of retirement plans that are intended to satisfy the requirements of 401(a), 403(a), 403(b), 408(k), or 408(p) of the Internal Revenue Code (the Code ), but that have not met these requirements for a period of time. This system, the Employee Plans compliance Resolution System ( EPCRS ), permits Plan Sponsors to correct these failures and thereby continue to provide their employees with retirement benefits on a tax-favored basis. The components of EPCRS are the Self-Correction Program ( SCP ), the Voluntary Correction Program ( VCP ), and the audit Closing Agreement Program ( audit CAP ).


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