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457(b) Plan Submissions to Voluntary Compliance

Some plan sponsors, under limited circumstances, may submit requests for voluntary correction to the IRS for their Code Section 457(b) retirement plans (Revenue Procedure.2013-12, Section 4.09). The IRS’s Employee Plans Voluntary Compliance (VC) team will consider these requests on a provisional basis outside of the Employee Plans Compliance Resolution System (EPCRS). VC retains complete discretion to accept or reject these requests. If accepted, VC will issue a special closing agreement. VC will not consider any issue relating to the form of a written 457(b) plan document. Also, governmental plan sponsors do not have to make a submission to VC to voluntarily fix problems with their 457(b) plans.

VC will not process submissions that involve the form of the written 457(b) plan

In the past year, we received several submissions alleging that a written 457(b) plan was not timely adopted, or amended for some tax law or income tax regulation. VC will not issue closing agreements for these matters and will decline to process these requests and refund any payments. Plan sponsors are reminded that the remedial amendment concepts and definitions in 
Rev. Proc. 2007-44 do not apply to 457(b) retirement plans.

Plan sponsors who want the IRS to review their 457(b) plan document or consider any other document form issue may request a private letter ruling. See Rev. Proc. 2014-4 (or annual successor revenue procedure) for details.

Governmental plan sponsors can self-correct

Governmental plan sponsors may self-correct and fix their 457(b) plans if they did not comply with the Code or regulations. Governmental entities have until the first day of the plan year that begins more than 180 days after the IRS notifies them of the failure to correct their plan failures (IRC Section 457(b)(6) and Treas. Regs. Section 1.457-9(a)). Considering the time governmental entities have to self-correct plan errors, they may not need to make voluntary submissions to the IRS in most cases.

If a governmental plan sponsor needs to request additional relief or simply wants IRS approval for a correction method for a non-plan document failure, they may make a submission to VC as permitted by Rev. Proc. 2013-12, Section 4.09. The plan sponsor must indicate that they are aware of the self- correction rule in IRC Section 457(b)(6) and Treas. Reg. Section 1.457-9, but still wants to proceed with a written VC application. Plan sponsors should include this statement and Form 8950, Application for Voluntary Correction Program (VCP) (instructions) in their submission.

Page Last Reviewed or Updated: 07-Aug-2014