Bipartisan Bill Could Expand Retirement Plan Self-Correction

Senator Rob Portman (R-OH) and Senator Ben Cardin (D-MD), who in several previous sessions of Congress have introduced legislation primarily focused on retirement plan enhancement and simplification, have teamed up to introduce “The Protecting Taxpayers Act.”

This legislation primarily is intended to make the IRS more responsive and accountable to taxpayers. Most of the bill’s provisions are of that nature. But one provision included in the legislation could have a significant effect on employer-sponsored retirement plan administration. This provision would “allow retirement plan administrators, except as otherwise provided in regulation, to self-correct all inadvertent plan violations without additional submissions to the IRS.”

This could have a dramatic effect on the number of retirement plan operational failures that would require formal submission and payment of fees for plan corrections. Given the prominence of these senators and the popular concept of a more responsive and accountable IRS, the bill is likely to have bipartisan support. Working against it in this session of Congress, however, is the short remaining schedule of Congressional work days.