First, it's helpful to understand that the EPCRS itself is not new. But it is periodically updated and that is what has happened now.  

Second, it helps to understand why this compliance resolution system is even necessary.  It centers around one of the more attractive features of qualified retirement plans, tax deferrals. A basic premise of the Internal Revenue Code (IRC) is that any payment between an employer and an employee is taxable income UNLESS that payment meets specific provisions AND a complex set of related regulations, then it can be tax deferred.

In other words, it is taxed at some point in the future, rather than immediately. Unfortunately there isn't wiggle room that allows for a best effort to satisfy most of the rules.  ALL of the rules have to be satisfied in order to get the favorable tax treatment.

Satisfying all of those rules, all of the time, is a tall order. The reality is that mistakes happen because these plans are administered by humans. When there are mistakes, the payments, or entire plan, can be "disqualified" or subject to taxes now rather than the future; or worse, could be taxable in the past, meaning the taxes are delinquent and penalties and interest would be due.

Fortunately, the government understands that mistakes happen; that it is good public policy to encourage retirement savings, and bad policy to punish individuals with tax consequences for human errors that are often beyond their control. That is why we have this compliance resolution system, the EPCRS.  It is a series of highly technical rules and procedures for correcting certain errors so that the plan can remain in compliance and favorable taxation is not lost. All of the compliance rules are complex in the first place, so it is not unreasonable—or surprising—to expect that correction methods will be even more complex.

Although a plan sponsor can go through the corrective processes themselves, it typically makes sense to involve experts who understand  the rules and who are authorized to practice before the IRS. Similar to a mistake on your personal income tax return, or a problem found on audit, you could represent yourself with the IRS, but it usually makes much more sense to hire a qualified tax advisor.

Back to 403(b)s

The callers are correct. This latest update has now incorporated 403(b) plans in a more meaningful way than ever before. In other words, there is more ability to correct human error in 403(b) plan compliance. The updated version of EPCRS generally allows 403(b) plans to take advantage of the same sorts of correction methodologies that have been available to 401(k) and other 401(a) plans.

Until now, 403(b) plans have not been afforded the luxury of having specific correction procedures and leaving them at risk of disqualification or having to negotiate error corrections with the IRS on a case by case basis. That was hardly efficient or very effective. Some bugs still need to be worked out of the system, but having 403(b) plans included in the EPCRS is a step in the right direction. 

As I said earlier, to err is human. To have a way for 403(b) plans to fix errors is divine.