EPCRS Rev. Proc. 2026-34: What a Solo 401(k) Owner Can Self-Fix
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Quick Answer
As of November 2, 2026, Rev. Proc. 2026-34, generally effective October 22, 2026, lets the sponsor of a 401(k) plan fix an “Eligible Inadvertent Failure” under the Self-Correction Program with no fee and no sanction, provided the plan had “established practices and procedures” and the fix is made within a reasonable period, which the text treats as met if it is completed by the later of the last day of the third plan year after the plan year of the failure or 18 months after you identified it (section 7.05(1)(a)). The window closes when the plan comes “Under Examination”, with narrow exceptions (sections 7.05(2)(a) and 8.01). If you file with the IRS instead, the Voluntary Correction Program fee is $2,000 for a plan with $500,000 or less, $3,500 up to $10,000,000 and $4,000 above that (Rev. Proc. 2026-4, Appendix A section .09). Four things cannot be self-fixed: a failure to adopt a written plan in the first place, a prohibited transaction under section 4975, a failure to file the Form 5500 series, and anything egregious or involving diversion of plan assets. Comments on the revenue procedure are due January 20, 2027. This is analysis of public documents, not investment, legal or tax advice.
Key Takeaways
- The self-correction clock is a “later of” test, not the “third plan year or 18 months” that some summaries print. Section 7.05(1)(a): a correction completed by the later of the last day of the third plan year following the failure year or 18 months after identification “is deemed to have been completed within a reasonable period”. Outside that, a reasonable period is judged on all the facts. Our arithmetic: a calendar-year plan with a 2025 failure found on November 2, 2026 is deemed timely through December 31, 2028; the same failure found on August 1, 2028 is deemed timely through February 1, 2030.
- The door shuts when an examination starts. Under section 7.05(2)(a) “the SCP correction period ends when the plan or Plan Sponsor comes Under Examination for that year”, and a verbal notice from the IRS that an examination is coming counts (section 4.08(2)(a)). After that only an insignificant Operational Failure, or one you had already shown a “specific commitment” to fix, can still be self-corrected (section 8.01); an annual audit or a general statement of intent does not count.
- You must be able to prove you had a process. Section 7.02 requires “established practices and procedures (formal or informal)” and says “A plan document alone does not constitute evidence of established procedures.” If asked in an examination you must show the failure, the years, the people affected, the date you found it, the method and the date finished (section 7.05(2)(b)).
- A missed 401(k) deferral has three price tiers. Fixed within three months with the right notice: no corrective contribution for the deferral. Up to three years past the failure year: 25 percent of the missed deferral. Otherwise 50 percent (Appendix sections .05(9)(a), .05(9)(b) and .05(5)(a)). Any matching money is owed in every tier. The revenue procedure’s own Example 15 is $4,800 at 50 percent; at 25 percent it would be $3,300 (our arithmetic).
- Self-correction costs $0 in fees; the IRS route does not. VCP is $2,000, $3,500 or $4,000 by plan assets, and an Audit CAP sanction “generally will not be less than the VCP user fee applicable to the plan” (section 13.01). A VCP filing cannot be anonymous (section 9.10), and the plan’s money fix is owed either way: full correction is the rule (section 6.02(1)).
- Some of the commonest owner mistakes are outside this program. Section 6.15(1) says prohibited transactions under section 4975 and failures to file the Form 5500 series “cannot be corrected under this revenue procedure”, and section 7.03(1) bars SCP for a plan that was never adopted in writing. Late deposits of employee deferrals are not addressed: the word “deposit” does not appear in the revenue procedure (our search of the text). Our reading is that they are an ERISA matter, and section 6.19 points to the Department of Labor’s VFCP for certain such violations.
- A missed required distribution is a self-fix with a catch. The plan can distribute the missed amount with earnings (Appendix section .06), but a waiver of the section 4974 excise tax is only available inside VCP or Audit CAP, with an explanation if the person is an owner-employee (section 6.15(2) and (2)(a)).
CSV · 123 rows
EPCRS Rev. Proc. 2026-34: self-correction rules, clocks, exclusions and VCP fees, November 2026
123 rows: the three programs, the SCP clocks and the examination cut-off, the failures that cannot be self-corrected, the correction method and QNEC rate for each common 401(k) failure, the VCP fee bands, orphan-plan rules for a deceased sole owner, and worked examples (our arithmetic), each with its section and PDF page.
What the IRS changed on October 22, 2026
Rev. Proc. 2026-34 is the 133-page rewrite of the IRS’s fix-it system for qualified plans, 403(b) plans, SEPs and SIMPLE IRA plans. Section 2.01 says it “modifies and supersedes Rev. Proc. 2021-30”, and section 14 also supersedes Notices 2023-43 and 2024-77 and part of Notice 2024-2. Its companion for IRAs, Rev. Proc. 2026-33, starts May 1, 2027 and is explained on our IRA Compliance Resolution System page; section 1.05 of this revenue procedure sends IRA problems there. A plan problem and an IRA problem are different doors.
| Change from Rev. Proc. 2021-30 | What it means for a small plan | Where |
|---|---|---|
| SCP now covers any Eligible Inadvertent Failure, including plan loan failures | More failures can be fixed without an IRS filing, subject to the exclusions below | Section 2.02(1)(a); section 4.09; section 7.01 |
| No favorable determination or opinion letter needed to use SCP | A plan without a letter is no longer shut out of self-correction | Section 2.02(1)(a)(ii) |
| Deemed reasonable period: the later of the third plan year after the failure year or 18 months after identification | The interim guidance, Notice 2023-43, said 18 months only (footnote 1); the final text is longer | Section 2.02(1)(a)(viii); section 7.05(1)(a) |
| Reduced QNEC for missed deferrals only if completed by the last day of the third plan year after the failure year | A hard date for the 25 percent method | Section 2.02(1)(a)(xiv); Appendix section .05(9)(b) |
| Safe harbor for automatic-enrollment errors has no sunset, and reaches terminated employees, SEPs and SIMPLE IRAs | Section 414(cc) of the Code, added by SECURE 2.0 section 350 | Section 2.02(1)(b) |
| Inadvertent benefit overpayments generally need no corrective payment, except for sections 401(a)(17), 415 and 436 failures, with a small-payment exception under $250 | Overpayment recovery is lighter; the $250 exception was added after comments | Section 2.02(1)(c); section 6.03(4); section 6.12 |
| Voluntary Closing Agreement Program (VCAP) referenced for income and excise tax issues EPCRS cannot resolve | A separate IRS route exists for some tax issues | Sections 1.04 and 2.02(2)(a) |
The three doors: SCP, VCP and Audit CAP
| Program | When it is open | Cost | What you do | Section |
|---|---|---|---|---|
| Self-Correction Program (SCP) | Eligible Inadvertent Failure; established practices and procedures; before an examination, with narrow exceptions | No fee or sanction | Correct it yourself and keep the proof; no submission is described in section 7 | Sections 1.03, 7 and 8 |
| Voluntary Correction Program (VCP) | Any time before the plan or sponsor is Under Examination | $2,000 for assets of $500,000 or less; $3,500 over $500,000 to $10,000,000; $4,000 over $10,000,000 | File on Pay.gov (paper is returned); no anonymous filing; an anonymous pre-submission conference can be requested | Sections 1.03, 9, 10 and 11; Rev. Proc. 2026-4 Appendix A section .09 |
| Audit CAP | A failure found on examination that was not corrected under SCP or VCP | Negotiated sanction, generally not less than the VCP fee | Closing agreement with the IRS | Sections 5.01(3), 12 and 13 |
The VCP fee is set outside this revenue procedure. Section 11 says “The user fees for all submissions under VCP are set forth in Appendix A of Rev. Proc. 2026-4 (and its annual successors).” The line in Rev. Proc. 2026-4, published December 29, 2025 in Internal Revenue Bulletin 2026-1, is headed “User Fees for VCP submissions under EPCRS Revenue Procedure 2021-30”; our reading is that the heading was not updated and that section 11 of the new text points to this line. The asset test uses end-of-year net assets on the most recently filed Form 5500 series return, or, for a plan that files none, the last day of the latest completed plan year. The schedule is annual, so a 2027 version is expected around the start of 2027 (our expectation, not stated in the text); treat these three figures as the 2026 numbers. Our arithmetic: a plan with $450,000 pays $2,000 and a plan with $750,000 pays $3,500, against $0 for a correct self-fix. Either way the same corrective contribution is owed, so the fee buys the IRS’s compliance statement, not a cheaper fix.
What you can self-correct, failure by failure
The table names the failure, the fix the revenue procedure permits, the time limit and the exact section. “Deemed timely” means the section 7.05(1)(a) test above. Safe harbor methods in the Appendix are “deemed to be a reasonable and appropriate method of correcting the failure” (section 6.02(4)).
| Failure | Permitted correction | Time limit | Section |
|---|---|---|---|
| Employee deferral not started or election not processed, three months or less | No corrective contribution for the missed deferral if correct deferrals begin by the first pay on or after the end of the three months and a notice goes out within 45 days; missed match still owed | Three months from the failure | Appendix .05(9)(a) |
| Same failure, more than three months but not beyond three years after the failure plan year | QNEC of 25 percent of the missed deferrals (20 percent for after-tax contributions), plus any missed match; notice within 45 days | Correct deferrals begin by the first pay on or after the last day of the third plan year after the failure year | Appendix .05(9)(b) and footnote 23 |
| Election not implemented, standard method | QNEC of 50 percent of the missed deferral plus missed match; the QNEC cannot go to a Roth account | Deemed timely (SCP) | Appendix .05(5)(a), (c) |
| Eligible employee left out of a non-safe-harbor 401(k) | QNEC of 50 percent of the missed deferral, found with the ADP for the group (the greater of 3 percent or the passing rate if no non-highly compensated employee deferred) | Deemed timely (SCP) | Appendix .05(2)(b)(i) |
| Plan with automatic enrollment, error not beyond 9½ months after the plan year | No QNEC or employer contribution for the missed deferrals if correct deferrals begin on time and a notice goes out within 45 days | 9½ months after the end of the failure plan year | Appendix .05(8) |
| Eligible employee left out of the employer contribution (profit sharing) | Corrective contribution equal to the allocation the employee would have had, plus earnings; or the reallocation method | Deemed timely (SCP) | Appendix .05(1)(a), (b) |
| Elective deferrals above the section 402(g) limit | Distribute the excess to the employee; it is taxable in the year of deferral and in the year distributed | Deemed timely (SCP) | Appendix .04 |
| Annual additions above the section 415 limit | Reduce the account by the excess, adjusted for earnings, and reallocate or hold it unallocated; returning deferrals within 9½ months after the limitation year counts as a procedure | Deemed timely (SCP) | Section 6.11(2); Appendix .08; section 7.02 |
| Top-heavy minimum not given to non-key employees | Contribute and allocate the required minimum | Deemed timely (SCP) | Appendix .02 |
| ADP or ACP test failed | QNECs for non-highly compensated employees | Later of the third plan year after the end of the section 401(k)(8) or 401(m)(6) period, or 18 months after identification | Appendix .03; section 7.05(1)(b) |
| Missed required minimum distribution from the plan | Distribute the missed amount with earnings; excise tax waiver only through VCP or Audit CAP | Deemed timely (SCP) | Appendix .06; section 6.15(2) |
| Plan loan too large, too long, not level, or in default | Corrective payment, reamortization or both; or report the deemed distribution on Form 1099-R, which may be done for the year of correction | Not available once the maximum repayment period has expired | Section 6.13(2), (3) |
| Loan made without spousal consent | Notify the participant and spouse so the spouse can consent; otherwise protect the spouse’s benefit at distribution | Deemed timely (SCP) | Section 6.13(4) |
| Late plan amendment (Nonamender or Interim Amendment Failure) | Adopt the corrective amendment | Adopted within the section 7.05 period | Section 6.07(3)(a), (b) |
| Vesting or compensation-limit error | Contribution or reallocation method; reduce the account for a section 401(a)(17) excess | Deemed timely (SCP) | Appendix .11 and .12 |
Three small-money rules matter to a one-person plan. A corrective distribution of $75 or less need not be made if the direct cost of delivering it would exceed the amount (section 6.03(3)); an overpayment or Excess Amount of $250 or less need not be recovered or distributed (section 6.03(4) and (5)); and corrective contributions have no such floor, since they “are required to be made with respect to a current or former participant, without regard to the amount” (section 6.03(3)). Earnings must be added, and if actual investment results cannot be estimated the interest rate of the Department of Labor’s online calculator is deemed reasonable (section 6.03(2)).
The deferral tiers are the practical heart of the document for any owner who hired their first employee. Using the revenue procedure’s Example 15, a $60,000 employee who asked to defer 10 percent had a missed deferral of $6,000 and a 3 percent match of $1,800; the 50 percent method gives a QNEC of $3,000 and a total of $4,800 before earnings. Our arithmetic under the 25 percent method, if its conditions are met: a QNEC of $1,500 and a total of $3,300, which is $1,500 less. Under the three-month method the deferral QNEC is $0 but the match is still owed.
What cannot be self-corrected
| Situation | Result | Section |
|---|---|---|
| The plan was never adopted in writing | SCP is not available for a failure to initially adopt a written plan | Sections 7.03(1) and 6.07(3)(c) |
| A prohibited transaction under section 4975 | “cannot be corrected under this revenue procedure”; the Code’s excise tax regime applies instead | Section 6.15(1) |
| Failure to file the Form 5500 series | Cannot be corrected under this revenue procedure; the Department of Labor runs a separate delinquent-filer program | Sections 6.15(1) and 6.19 |
| An egregious failure | Not available in SCP; in VCP the IRS may impose a sanction larger than the fee, for example where the parties “recognized that the action taken would constitute a failure” | Sections 5.06(2), (3) |
| Diversion or misuse of plan assets | SCP, VCP and Audit CAP are all unavailable | Section 5.07 |
| A SEP or SIMPLE IRA plan not on a model form or a prototype with an opinion letter | SCP is not available | Section 7.03(2), (3) |
| An examination has started | Only insignificant Operational Failures, or failures with a prior specific commitment to correct | Sections 7.05(2)(a) and 8.01 to 8.04 |
| A late deposit of employee deferrals, or another ERISA fiduciary violation | Not addressed in the text; section 6.19 points to the Department of Labor’s VFCP for certain fiduciary violations, and a VFCP correction of a similar failure is generally taken into account | Sections 6.02(11)(b) and 6.19 |
| An IRA problem | Moved to the separate IRA program, Rev. Proc. 2026-33 | Section 1.05 |
For a real-estate investor the prohibited-transaction row is the one to read twice, and the egregious row carries a dollar trap. Egregious examples in section 5.06(1) include “a defined contribution plan where a contribution is made on behalf of a highly compensated employee that is several times greater than the dollar limit set forth in section 415(c)”. The dollar limits themselves are on our 2026 401(k) limits page, and the question of what a solo 401(k) may hold, including prohibited-transaction traps, is on our solo 401(k) versus self-directed IRA page. A prohibited transaction cannot be repaired through EPCRS once it has happened.
When the examination clock starts, and the $4,550 example
Section 4.08 defines “Under Examination” as an Employee Plans examination (including of a Form 5500 series return), an Exempt Organizations examination of the sponsor, or a Criminal Investigation inquiry; a plan is in once its sponsor has “received verbal or written notification from Employee Plans of an impending Employee Plans examination”. A plan is also treated as examined if it is aggregated for certain tests with a plan that is.
While Under Examination, the test for an “insignificant” Operational Failure is facts and circumstances (section 8.03): other failures, share of assets and contributions, years, participants affected, time to correct, and the reason. The text adds that the share of assets and participants factors “should not be interpreted to exclude small businesses”. Two of the revenue procedure’s examples show the range. In Example 1 three of 50 limited participants had excess additions totalling $4,550 against a $3,500,000 employer contribution; that is 0.13 percent of the contribution and 6 percent of the people (our arithmetic) and it is insignificant. In Example 3, 18 of 50 had excesses totalling $150,000, which is 4.29 percent of the contribution and 36 percent of the people (our arithmetic), and it is significant. The $4,550 is not a safe amount: it is one set of facts in one example.
A calendar of the dates that matter
| Date or clock | What happens | Source |
|---|---|---|
| October 22, 2026 | Rev. Proc. 2026-34 is generally effective | Section 15 |
| January 20, 2027 | Comments due, referencing Rev. Proc. 2026-34 (docket IRS-2026-1388 on regulations.gov); late comments may still be considered | Section 16 |
| December 31, 2026 | Last day of the 2026 plan year for a calendar-year plan, which ends the 25 percent QNEC window for a 2023 plan-year deferral failure (the revenue procedure’s own 2023 and 2026 example; our arithmetic is 59 days from November 2, 2026) | Appendix .05(9)(b) |
| Three months after a deferral failure | Deadline for the no-QNEC method, with a notice within 45 days after correct deferrals begin | Appendix .05(9)(a) |
| Third plan year after the failure year, or 18 months after identification, whichever is later | End of the deemed reasonable period for SCP | Section 7.05(1)(a) |
| Six months after identification | Employer Eligibility Failure: contributions must stop by the last day of the sixth month | Section 7.05(1)(c) |
| Start of 2027 | Next annual Employee Plans revenue procedure sets the VCP fee schedule; the 2026 figures above may change | Section 11 |
If the owner dies: the orphan-plan rule
Section 4.03(2)(c) names a case that is easy to miss. For a plan to which Title I of ERISA never applied, an “Eligible Party” can be “a surviving spouse who is the sole beneficiary of a plan that provided benefits to a participant who was (i) the sole owner of the business that sponsored the plan and (ii) the only participant in the plan.” An Orphan Plan cannot use SCP (section 5.04); it uses VCP or Audit CAP, the permitted correction is to terminate the plan and distribute the assets (section 6.14(2)), and the IRS may waive the VCP user fee for a terminating Orphan Plan. The IRS also reserves the right to pursue remedies against the owner “even in its capacity as a participant or beneficiary”.
What a reader can do with this
- Write down what you did and when you found it. Section 7.05(2)(b) lists the file an examiner can ask for. The date of identification starts the 18-month limb, so record it.
- Check whether you have a process. A plan document does not count as evidence of procedures (section 7.02). A written annual checklist for deferral limits, the 415 limit, loans and required distributions is the kind of thing the section describes, though “formal or informal” both qualify.
- Sort the problem into a row of the failure table. If it is a deferral, a loan, an excess, a late amendment or a missed distribution, SCP may fit. If it is a prohibited transaction, an unfiled Form 5500 series return or a plan never adopted in writing, it does not.
- Act before any contact from the IRS. Once an Employee Plans examination is announced, even verbally, the general SCP period ends (sections 4.08 and 7.05(2)(a)).
- Compare the price tiers for a missed deferral. The same failure costs 0, 25 or 50 percent of the missed deferral depending on how fast it is fixed and noticed (Appendix section .05).
- For a loan or a missed distribution, calendar the stopping point. Loan correction ends when the maximum repayment period has expired (section 6.13(3)(a)); the excise tax waiver on a missed distribution needs VCP.
- Comment if it affects you. The IRS invites written comments through January 20, 2027.
FAQ
Update alert · free
An email when the 401(k) plan correction program (epcrs) numbers change
When a rate, rule or filing behind this page changes: what changed, the one number that matters, and the source to check it yourself.
Sources, read and saved on November 2, 2026: IRS Revenue Procedure 2026-34 (Employee Plans Compliance Resolution System, 133 pages, https://www.irs.gov/pub/irs-drop/rp-26-34.pdf); IRS Revenue Procedure 2026-4, Internal Revenue Bulletin 2026-1 of December 29, 2025, Appendix A schedule of user fees. Worked examples and date arithmetic are ours on the figures and hypothetical dates given. This is analysis of public documents, not investment, legal or tax advice.
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