Retirement accounts come with a lot of rules, and sometimes things go wrong. A provider sets up the wrong type of account. A required withdrawal falls short. A rollover misses its deadline. When that happens, the tax consequences can land on you.

On October 22, 2026, Treasury and the IRS issued two revenue procedures that update how certain retirement account mistakes can be corrected. One expands the existing correction program for employer retirement plans. The other creates a brand-new program for Individual Retirement Accounts (IRAs). Here is what business owners and IRA owners should know.

The Short Version

• For employer plans: the IRS expanded its Employee Plans Compliance Resolution System, known as EPCRS. The update took effect on October 22, 2026.

• For IRAs: the IRS created the IRA Compliance Resolution System, known as ICRS. It takes effect on May 1, 2027, so it is not available yet.

For Business Owners: What Is New for Employer Plans

EPCRS is the IRS program that lets plan sponsors correct certain errors and continue providing retirement benefits on a tax-favored basis. It applies to sponsors of qualified plans, 403(b) plans, SEP arrangements, and SIMPLE IRA plans. It has three parts: the Self-Correction Program, the Voluntary Correction Program (which requires IRS approval), and the Audit Closing Agreement Program.

The updated procedure replaces and restructures the version that sponsors have used until now, and it pulls in changes from the SECURE 2.0 Act and earlier IRS interim guidance. Highlights include:

• Self-correction has been expanded to cover "eligible inadvertent failures," including loan failures identified in the revenue procedure. A sponsor that has established compliance practices and procedures may correct these failures without paying a fee or sanction.

• There are updated rules for correcting overpayments made to participants.

• The safe harbor for correcting missed elective deferrals in plans with automatic enrollment or automatic escalation no longer has an expiration date.

• There is a new safe harbor for sponsors of defined benefit plans that failed to provide a suspension of benefits notice to certain participants.

• The rules for group submissions to the Voluntary Correction Program have been revised.

Timing matters here. In general, self-correction and the Voluntary Correction Program are not available once a plan or its sponsor is under IRS examination. A sponsor can use the Voluntary Correction Program at any time before that point.

For IRA Owners: A New Way to Fix Certain Mistakes

EPCRS covers employer plans, and certain IRA failures cannot be resolved under it. The SECURE 2.0 Act directed Treasury to expand EPCRS to allow IRA custodians to address eligible inadvertent failures with respect to IRAs. The new ICRS is the IRS's answer. It is modeled after EPCRS and lets IRA owners and IRA custodians request correction of certain eligible failures.

At launch, ICRS can correct four types of failures. Here they are in plain English, with examples based on the ones the IRS itself uses:

• A distribution that fell short of your required minimum distribution (RMD). Say your RMD is $10,000, but your custodian only distributes $8,000. You would generally owe an excise tax on the $2,000 difference, unless an exception applies.

• The wrong type of IRA. You ask a provider to open a traditional IRA, but they open a Roth IRA instead. If you deduct the contribution as though it went into a traditional IRA, you could owe income tax when that deduction is disallowed.

• A nonspouse beneficiary rollover gone wrong. A service provider leads a nonspouse beneficiary to believe an inherited IRA distribution can be rolled over without being taxed. It cannot, and the distribution becomes taxable income.

• A missed 60-day rollover. A distribution is not rolled over within 60 days, and failing to waive the deadline would be against equity or good conscience. That includes a casualty, a disaster, or other events beyond your reasonable control. Without a waiver, you could owe income tax and, in some cases, an additional 10% tax.

For the first three, the failure must have resulted from an error by a service provider, such as an IRA custodian. A missed 60-day rollover does not need to involve a service provider error.

How the IRA Program Works

• ICRS currently consists of one program, the IRA Voluntary Correction Program. The IRS reviews each submission and, if it agrees on the correction, issues a compliance statement. Self-correction is not available under ICRS at this time.

• Applicants file Form 15443 through Pay.gov and pay a user fee. For a regular submission filed before 2028, the fee is $3,500.

• If the correction is completed as required, the compliance statement provides that the IRS will not treat the IRA as failing to meet the IRA requirements because of the failures it describes.

• An application can also request relief from certain excise taxes and the 10% additional tax on early distributions. The IRS decides these requests case by case.

• Correcting a failure can change your tax liability, so you may need to file an original or amended return afterward.

• You must be current on your tax filings, and the program is generally not available if your return is under examination.

• The IRS recommends that IRA owners contact their IRA custodian before submitting an application.

Missed a 60-Day Rollover? Read This First

ICRS also includes a process for retirement plan participants and IRA owners to request a waiver of the 60-day rollover deadline. Today, these requests must be submitted as private letter ruling requests. For 2027, requests can be made under either ICRS or the annual private letter ruling procedure. Starting in 2028, the IRS anticipates that waiver requests will only be permitted under ICRS.

Here is the good news: existing automatic waiver and self-certification procedures remain available at no cost for taxpayers who meet their requirements. Depending on your situation, you may not need ICRS at all.

A waiver can be requested for an eligible rollover distribution from an IRA, a 401(a) qualified plan, a 403(a) annuity plan, a 403(b) tax-sheltered annuity, or a governmental 457(b) plan.

Still Open for Comment

Treasury and the IRS invite comments on both programs. The ICRS revenue procedure specifically asks for comments on additional failures that could be corrected in future versions of the program. Comments on the ICRS procedure should be submitted on or before January 20, 2027.

What You Can Do Now

• If you sponsor a retirement plan, review any known compliance issues with your advisers. The updated EPCRS is already in effect, and the Voluntary Correction Program is available only before the plan is under examination.

• If you own an IRA, keep clear records of your distributions, rollovers, and required minimum distributions. ICRS applications ask for a description of what happened and any available supporting documentation.

• If you missed a 60-day rollover deadline, free automatic waiver or self-certification procedures may already apply in some cases.

The Bottom Line

Mistakes with retirement accounts are not the end of the road. Employers now have an updated correction program, and IRA owners will have a new one starting May 1, 2027. Whether a failure is eligible for correction depends on the facts and circumstances, so it is worth getting advice before you act.

If you have questions about a plan you sponsor or an IRA you own, contact our office. We can help you understand your options and plan next steps.