IRS Issues Interim Guidance on SECURE 2.0 Self-Correction Expansion

The IRS recently issued Notice 2023-43 (Notice) to provide interim guidance on Section 305 of SECURE 2.0 Act of 2022 (SECURE 2.0), which significantly expanded self-correction under the Employee Plans Compliance Resolution System (EPCRS). The Treasury Department was directed under SECURE 2.0 Section 305 to issue an updated version of EPCRS (most recently set forth in Rev. Proc. 2021-30) by December 29, 2024. The Notice is intended to provide some answers to plan sponsors in advance of the update to Rev. Proc. 2021-30.

In general, Section 305 of SECURE 2.0 broadened the scope of self-correction by permitting any eligible inadvertent failures (EIFs) to be self-corrected within a reasonable period after the failure is identified. SECURE 2.0 defines the self-correction period as indefinite, with no last day, so long as the IRS does not identify the failure before the plan sponsor takes action demonstrating a specific commitment to implement a self-correction to the failure.

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Use of Forfeitures in Qualified Retirement Plans

On February 27, 2023, the IRS and the Department of Treasury published proposed regulations regarding the use of forfeitures in qualified retirement plans. If finalized, the proposed rule will be effective for plan years beginning on or after January 1, 2024. However, plans may rely on the proposed regulations now.

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