EXPANSION OF EMPLOYEE PLANS COMPLIANCE RESOLUTION SYSTEM.

SEC. 305. EXPANSION OF EMPLOYEE PLANS COMPLIANCE RESOLUTION SYSTEM.(a) In General.—Except as otherwise provided in the Internal Revenue Code of 1986, regulations, or other guidance of general applicability prescribed by the Secretary of the Treasury or the Secretary’s delegate (referred to in this section as the “Secretary”), any eligible inadvertent failure to comply with the rules applicable 136 STAT. 5342 under section 401(a), 403(a), 403(b), 408(p), or 408(k) of such Code may be self-corrected under the Employee Plans Compliance Resolution System (as described in Revenue Procedure 2021–30, or any successor guidance, and hereafter in this section referred to as the “EPCRS”), except to the extent that (1) such failure was identified by the Secretary prior to any actions which demonstrate a specific commitment to implement a self-correction with respect to such failure, or (2) the self-correction is not completed within a reasonable period after such failure is identified. For purposes of self-correction of an eligible inadvertent failure, the correction period under section 9.02 of Revenue Procedure 2021–30 (or any successor guidance), except as otherwise provided under such Code, regulations, or other guidance of general applicability prescribed by the Secretary, is indefinite and has no last day, other than with respect to failures identified by the Secretary prior to any actions which demonstrate a specific commitment to implement a self-correction with respect to such failure or with respect to a self-correction that is not completed within a reasonable period, as described in the preceding sentence. (b) Loan Errors.—In the case of an eligible inadvertent failure relating to a loan from a plan to a participant—(1) such failure may be self-corrected under subsection (a) according to the rules of section 6.07 of Revenue Procedure 2021–30 (or any successor guidance), including the provisions related to whether a deemed distribution must be reported on Form 1099–R, (2) the Secretary of Labor shall treat any such failure which is so self-corrected under subsection (a) as meeting the requirements of the Voluntary Fiduciary Correction Program of the Department of Labor if, with respect to the violation of the fiduciary standards of the Employee Retirement Income Security Act of 1974, there is a similar loan error eligible for correction under EPCRS and the loan error is corrected in such manner, and (3) the Secretary of Labor may impose reporting or other procedural requirements with respect to parties that intend to rely on the Voluntary Fiduciary Correction Program for self-corrections described in paragraph (2). (c) EPCRS for IRAs.—The Secretary shall expand the EPCRS to allow custodians of individual retirement plans (as defined in section 7701(a)(37) of the Internal Revenue Code of 1986) to address eligible inadvertent failures with respect to an individual retirement plan (as so defined), including (but not limited to)—(1) waivers of the excise tax which would otherwise apply under section 4974 of the Internal Revenue Code of 1986, and (2) rules permitting a nonspouse beneficiary to return distributions to an inherited individual retirement plan described in section 408(d)(3)(C) of the Internal Revenue Code of 1986 in a case where, due to an inadvertent error by a service provider, the beneficiary had reason to believe that the distribution could be rolled over without inclusion in income of any part of the distributed amount. (d) Correction Methods for Eligible Inadvertent Failures.—The Secretary shall issue guidance on correction methods that are required to be used to correct eligible inadvertent failures, 136 STAT. 5343 including general principles of correction if a specific correction method is not specified by the Secretary. (e) Eligible Inadvertent Failure.—For purposes of this section—(1) In general.—Except as provided in paragraph (2), the term “eligible inadvertent failure” means a failure that occurs despite the existence of practices and procedures which—(A) satisfy the standards set forth in section 4.04 of Revenue Procedure 2021–30 (or any successor guidance), or (B) satisfy similar standards in the case of an individual retirement plan. (2) Exception.—The term “eligible inadvertent failure” shall not include any failure which is egregious, relates to the diversion or misuse of plan assets, or is directly or indirectly related to an abusive tax avoidance transaction. (f) Application of Certain Requirements for Correcting Errors.—This section shall not apply to any failure unless the correction of such failure under this section is made in conformity with the general principles that apply to corrections of such failures under the Internal Revenue Code of 1986, including regulations or other guidance issued thereunder and including those principles and corrections set forth in Revenue Procedure 2021–30 (or any successor guidance). (g) Issuance of Guidance.—The Secretary of the Treasury, or the Secretary’s delegate, shall revise Revenue Procedure 2021–30 (or any successor guidance) to take into account the provisions of this section not later than the date which is 2 years after the date of enactment of this Act.