A flowchart that describes how to correct participants who obtain more loans than a 401(k) plan allows. The flowchart explains the correction when a participant obtains a loan but the plan document does not allow loans. It also explains the correction when a participant takes too many loans under the plan (for example, the plan document limits participants to one loan and a participant obtains two outstanding loans). The flowchart explains the correction methods available to plan sponsors under the Employee Plans Compliance Resolution System (EPCRS) in IRS Rev. Proc. 2021-30. The flowchart identifies when the Voluntary Correction Program (VCP) is required and where self-correction is available through the Self-Correction Program (SCP).

This Chart reflects EPCRS under Revenue Procedure 2021-30. The SECURE 2.0 Act of 2022 significantly expanded the self-correction options available to plan sponsors (see Practice Note, Correcting Qualified Plan Errors Under EPCRS: Significant Expansion of Self-Correction Under SECURE 2.0). The IRS has not issued a revised Revenue Procedure reflecting SECURE 2.0. For more details on plan corrections, see Practice Notes, Correcting Retirement Plan Participant Loan Errors and Correcting Qualified Plan Errors Under EPCRS.