If you run a 401(k), a SEP, or a SIMPLE IRA for your employees, there is a good chance something in it has already gone wrong. Someone got enrolled a quarter late. A deferral sat in the operating account for three weeks before it reached the custodian. These are the ordinary errors of a business with eight people and no benefits department — and for several of them, the only clean fix used to be a formal submission to the IRS with a user fee attached.

On October 22, 2026 the IRS rewrote that rulebook. Revenue Procedure 2026-34, announced the same day in news release IR-2026-126, modifies and supersedes Rev. Proc. 2021-30 as the Employee Plans Compliance Resolution System — EPCRS, the program that lets you correct plan failures instead of putting the plan’s tax status at risk. It is generally effective that date, and the part it widens most is the part you can do yourself.

What changed on October 22

EPCRS has three doors. The Self-Correction Program (SCP) fixes certain failures without contacting the IRS or paying a fee. The Voluntary Correction Program (VCP) means a submission, a user fee, and IRS sign-off. Audit CAP is what is left if the IRS finds the failure first — you correct it and pay a sanction.

The new procedure folds in the SECURE 2.0 Act changes that had been running on interim guidance, superseding Notice 2023-43, Notice 2024-77 and section II.I of Notice 2024-2. The practical result: SCP now covers “Eligible Inadvertent Failures” in qualified plans, section 403(b) plans, SEP arrangements and SIMPLE IRA plans, including certain plan loan failures, and the old requirement that your plan be the subject of a favorable IRS letter before you could self-correct is gone. An Eligible Inadvertent Failure is one that happened despite real procedures being in place; anything egregious, anything involving the diversion or misuse of plan assets, and anything tied to an abusive tax avoidance transaction is excluded.

The catch is procedures, not the plan document

To self-correct, you must have had established practices and procedures — formal or informal — reasonably designed to promote overall compliance with the Code, in place and routinely followed, with the failure happening through an oversight in applying them.

The sentence in section 7.02 that decides most small-employer cases is this one: a plan document alone does not constitute evidence of established procedures. The binder from the day you signed up is not a procedure. A monthly step on someone’s checklist reconciling the deferrals withheld on payroll against what the custodian actually received — that is. Clear that bar and the rule turns forgiving: SCP is still available where your procedures were reasonable but simply not sufficient to prevent the failure.

SEP and SIMPLE plans are in — if your document is the right document

This is the change that matters most to a small LA County employer, and it comes with a paperwork condition. A SEP failure is self-correctable only if the plan document is a valid Model Form 5305-SEP or 5305A-SEP adopted per that form’s instructions, or a prototype SEP with a current favorable opinion letter amended under Rev. Proc. 2002-10. For a SIMPLE IRA plan it must be Form 5305-SIMPLE or 5304-SIMPLE, or a prototype with a current letter. Two exclusions catch people: never having adopted a written plan at all, and any correction leaving excess amounts in the IRA. Both go to VCP.

How long you have to fix it

Correction has to be completed within a reasonable period after you identify the failure. You are deemed to have met that if you finish by the later of the last day of the third plan year following the plan year in which the failure occurred, or 18 months after you identified it. That is real runway — but it starts when you notice, so noticing is the whole game. The window narrows once a plan or sponsor is under examination: SCP is then available only if you had already demonstrated a specific commitment to correcting the failure, or the failure is an insignificant operational failure. Find it before the IRS does.

A companion procedure, Rev. Proc. 2026-33, sets up a parallel IRA Compliance Resolution System for IRA-side errors caused by a service provider. It is effective May 1, 2027 — not yet.

What this means for you

If you sponsor a 401(k), SEP or SIMPLE IRA, the cheapest window to fix a known problem is now open and it is wider than it was last month. Most ordinary, inadvertent errors can be corrected on your own, with no IRS filing and no user fee, provided you can show the routine you were following when it slipped. The order of operations is: write down the procedure you actually use, reconcile the plan against payroll, and correct what the reconciliation turns up — in that order, because the procedure is what makes the correction free.

Before your plan year closes

  • Reconcile deferrals withheld on every 2026 payroll against the deposits your custodian actually received — dates, not just totals
  • Check eligibility: anyone who crossed your plan’s service threshold this year and was not enrolled on time
  • Pull your plan document out and confirm what it is. For a SEP: Form 5305-SEP, 5305A-SEP, or a prototype with a current favorable opinion letter. For a SIMPLE: Form 5305-SIMPLE or 5304-SIMPLE, or a prototype with a current letter
  • Write down the compliance steps you already perform and when — this is the “established practices and procedures” test, and a plan document alone will not satisfy it
  • Date-stamp anything you find. The deemed-reasonable correction period runs from identification, so a dated note is worth having
  • Keep egregious problems, anything touching misuse of plan assets, and a plan you never actually adopted in writing out of self-correction — those need VCP or counsel
  • If you do end up in VCP, the user fee comes from Appendix A of the annual Employee Plans revenue procedure — Rev. Proc. 2026-4 as of this writing — and is due when you file

Most plan failures start as payroll failures — see what “handled” actually covers in our note on payroll for La Crescenta and Glendale small businesses, and put the reconciliation on the list in the mid-year tax review.

Sources & further reading

This article is general information, not tax advice for your specific situation. Rules change and details matter — talk to a CPA (we know one) before acting on anything here.