SECURE 2.0 Guidance Helps Plan Sponsors Clean the Slate


This IRS has issued Notice 2023-43 as regulators begin the job of issuing the guidance needed to implement the provisions of SECURE 2.0. This Notice makes it easier for plan sponsors to correct administrative errors–without the need for IRS filings or penalties.

Mistakes Happen–So What to Do?

Since 1991 the IRS has had a program allowing plan sponsors to correct administrative errors. These corrections are, generally, placed into two categories: “insignificant” errors–that could be self-corrected by a plan sponsor without the need for an IRS filing (under the IRS’ Self-Correction Program or “SCP”) and more significant errors that could only be corrected through a filing with the IRS and IRS approval of the correction methodology used (the Voluntary Correction Program or “VCP”)

Over the years the IRS has gradually expanded the ability to self-correct–expanding the categories of errors eligible for SCP and the liberalizing other aspects of SCP (such as the deadlines for use of SCP). The most recent set of SCP rules is contained in IRS Revenue Procedure 2021-30.

SECURE 2.0 took this trend–of expanding the availability of SCP–to the next level by directing the IRS to allow self-correction for any “inadvertent” error as long as:

  • The error is not “egregious,” does not relate to a diversion or misuse of plan assets, and does not involve an “abusive tax avoidance scheme.”
  • The plan sponsor (or administrator) has established practices and procedures (formal or informal) reasonably designed to promote and facilitate overall compliance.
  • The self-correction is completed within a “reasonable time” after the error is discovered.

Notice 2023-43

Notice 2023-43 takes the first steps in implementing the SECURE 2.0 expansion of SCP:

  • Plan sponsors can start using the expanded SCP rules effective immediately. This means that any “Eligible Inadvertent Failure” can be self-corrected–even an error that occurred before SECURE 2.0 or this guidance (if the other requirements of Notice 2023-43 are met).
  • The expansion of SCP provides several significant opportunities for plans. Most significantly:
    • Loan failures are now eligible for SCP; under prior rules loan failures could only be corrected through a submission to the IRS and were not eligible for self-correction.
    • There is no “end date” on the use of self-correction under Notice 2023-43–so errors that occurred years ago (and are just discovered now) can still use this guidance.
  • The Notice places a few limits on the new use of SCP procedures:
    • Expanded SCP is generally not available for plan errors once the plan comes under examination by the IRS. However, once a plan comes under IRS examination:
      • Self-correction remains available for significant errors if (prior to the examination) the plan has taken “actions demonstrating a specific commitment to implement self-correction.”
      • Even after the plan is under examination, an “insignificant” error can still use self-correction. The IRS has issued guidelines for identifying insignificant errors and the definition covers a broad range of errors.

These are generous standards–they do not require the plan complete the self-correction (of a significant error) before commencement of the IRS examination and the commencement of an IRS examination does not preclude use of self-correction for insignificant errors.

  • As noted, expanded SCP is not available for “egregious” errors. Notice 2023-43 defines egregious–and it is limited to a very small, specific list of failures (including a plan that has consistently and improperly covered only highly compensated employees and a plan where a contribution is made on behalf of a highly compensated employee that is several times greater than the $66,000 dollar limit in Code Section 415).
    • Until further guidance is issued, expanded SCP is also not available to certain errors listed in Notice 2023-41 (including failure to initially adopt a plan document or errors considered to be “significant”).
    • The expanded SCP must (otherwise) follow correction principles established under existing SCP rules. These rules provide both direct and indirect guidance on the methodologies for correcting different types of errors.
    • As noted, under Notice 2023-43 an Eligible Inadvertent Failure must be corrected within a “reasonable time” after the error is discovered. Under Notice 2023-43 an error is considered corrected within a reasonable time if it is corrected within 18 months of discovery by the plan sponsor.


Plan sponsors using self-correction should substantiate the fact that a correction has been made. Notice 2023-43 clarifies the kind of documentation that is appropriate–documentation that:

“ (1) identifies the failure, including the years of occurrence, the number of employees affected, and the date the failure was identified;

(2) explains how the failure occurred and demonstrates there were established practices and procedures (formal or informal) reasonably designed to     promote and facilitate overall compliance that were in effect when the failure occurred;

(3) identifies and substantiates the correction method and the date of the completion of the correction; and

(4) identifies any changes made to those established practices and procedures to ensure that the same failure would not recur.”

Cleaning the Slate

Errors occur–affecting even the most careful plan sponsor. This notice gives plan sponsors a set of expanded–and straightforward–opportunities to correct these errors and clean the slate.