24 March 2018

Self-Correction of Retirement Plan Errors

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You can self-correct many retirement plan errors without contacting the IRS or paying a fee. There are no application or reporting requirements.  

Self-correction, also known as the Self-Correction Program or “SCP,” is authorized under Revenue Procedure 2013-12, the revenue procedure that governs the Employee Plans Compliance Resolution Program (EPCRS).

You can self-correct an insignificant operational error at any time to preserve the tax-favored status of your plan. An operational error occurs when you don’t follow the written terms of the plan. Even where the operational error is significant, you may still be able to self-correct if action is taken in a timely manner.


Availability and Timing of Retirement Plan Self Correction 


Type of failure   Type of plan   Self-correction available?       When must self-correction be completed?   
Insignificant operational 

   At any time
Significant operational 

  •  401(k), profit- sharing or other qualified plan                 
  • 403(b) plan  


  • before the end of the second plan year after the failure occurred, or  
  • substantially corrected within a reasonable time  
  • SIMPLE IRA plan  
  • SEP plan  

     N/A – Use VCP
Related to plans acquired in corporate merger      Special rule Yes
  • substantially corrected before the end of the plan year beginning after the business transaction  
  • allowed even if failure occurred more than two plan years earlier  
ADP or ACP test violations      Special rule Yes
  • substantially corrected before the end of the second plan year following the plan year that includes the last day of the additional period for correction permitted under IRC Sections 401(k)(8) or 401(m)(6)  

Egregious       Any     No       N/A - Use VCP


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