Specialists in ERISA and Employee Benefits Law​

What is SCP?


What is SCP?  Operational defects in the operation of a qualified plan may be corrected in accordance with the self-correction procedures (SCP) under the IRS Employee Plans Compliance Resolution System (EPCRS).

In order to be eligible for self-correction under SCP, the plan must have:

Determination Letter

A favorable determination letter or equivalent. “Equivalent” would be an IRS opinion or advisory letter issued on a pre-approved document, upon which the plan may rely in accordance with the IRS requirements.

Practices & Procedures

Established (formally or informally) practices and procedures reasonably designed to promote and facilitate overall compliance with applicable Internal Revenue Code requirements.

In addition, in order to self-correct an operational defect, the errors must constitute operational failures that are corrected within the three-year self-correction period OR are insignificant. What is considered insignificant is based on many factors.

Every situation is unique and the analysis is based on the specific facts and circumstances. Appropriate self-correction requires experience and knowledge regarding the legal requirements, not just the operational aspects of the plan.

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There is no guarantee that the IRS will agree that the defects are eligible for self-correction or that the method of self-correction used is sufficient to preserve and restore the tax-qualified status of the Plan. Accordingly, any self-correction method should be undertaken and documented carefully under the current IRS  procedure. Any alternative correction methods should be submitted to the IRS under VCP.

Note that insignificant failures can be corrected at any time, even if the plan is under audit.

If you have any questions about self-correcting an operational defect, or other correction issues,  please contact one of our experienced attorneys.