Rev. Proc. 2026-33, October 22, 2026

The Internal Revenue Service has issued Revenue Procedure 2026-33, establishing the IRA Compliance Resolution System (ICRS). Effective May 1, 2027, this administrative mechanism provides IRA Custodians and IRA Owners a formal, centralized path to correct specified “Eligible Inadvertent Failures” that historically threatened the tax-favored status of individual retirement arrangements or triggered significant tax penalties.

At launch, ICRS consists solely of the IRA Voluntary Correction Program (IVCP). Revenue Procedure 2026-33 also marks a major administrative shift by transitioning requests for waivers of the 60-day rollover requirement under Internal Revenue Code (IRC) §§ 402(c)(3)(B) and 408(d)(3)(I) away from costly Private Letter Ruling (PLR) requests under Rev. Proc. 2026-4 toward the newly structured IVCP framework.

This article provides tax practitioners—CPAs, Enrolled Agents, and tax attorneys—with a technical analysis of the statutory authority underlying ICRS, the scope of program eligibility, the mechanics of the four covered failure categories, the general correction principles and excise tax relief provisions, and the procedural mandates required to secure a binding compliance statement.

Statutory Framework and Legislative Mandate

The statutory foundation for Revenue Procedure 2026-33 derives directly from Congressional action under Section 305(c) of Division T of the Consolidated Appropriations Act, 2023, Pub. L. 117-328, 136 Stat. 4459 (2022), commonly known as the SECURE 2.0 Act of 2022. As the IRS explicitly observes in the ruling text:

“Section 305(c) of Division T of the Consolidated Appropriations Act, 2023, Pub. L. 117-328, 136 Stat. 4459 (2022), known as the SECURE 2.0 Act of 2022, provides that the Secretary of the Treasury or the Secretary’s delegate shall expand the Employee Plans Compliance Resolution System (EPCRS) to allow custodians of IRAs to address Eligible Inadvertent Failures with respect to an IRA.”

In exercising this statutory mandate, the Treasury Department and the IRS established ICRS to parallel aspects of EPCRS while addressing the unique legal structure of individual retirement accounts under IRC § 408(a) and individual retirement annuities under IRC § 408(b), including Roth IRAs under IRC § 408A.

In addition to SECURE 2.0 Act § 305(c), the IRS anchors its authority to grant relief for 60-day rollover failures in IRC §§ 402(c)(3)(B) and 408(d)(3)(I), which authorize the Secretary to waive the 60-day rollover period where failure to do so would be “against equity or good conscience, including casualty, disaster, or other events beyond the reasonable control of the plan participant or IRA Owner.”

Revenue Procedure 2026-33 fundamentally alters the administrative mechanism for obtaining these waivers. The IRS explicitly lays out this transition:

“This revenue procedure also transitions requests for waivers of the 60-day rollover requirement under sections 402(c)(3) and 408(d)(3) of the Internal Revenue Code (Code) from private letter ruling requests under Rev. Proc. 2026-4, 2026-1 IRB 160, to requests for waivers under ICRS. For 2027, taxpayers may submit requests for waivers of the 60-day rollover requirement under either ICRS or Rev. Proc. 2027-4... Starting in 2028, it is anticipated that requests for such waivers will only be permitted under ICRS.”

Program Eligibility and Qualifying Taxpayers

Understanding who qualifies as an “Applicant” and which accounts are eligible is critical before initiating an IVCP filing. Under Section 2.01, an Applicant is defined as the “IRA Custodian or IRA Owner who makes the IVCP submission.”

The terms defining eligible entities and retirement vehicles are specifically delineated:

IRA: Includes individual retirement accounts under IRC § 408(a), individual retirement annuities under IRC § 408(b), Roth IRAs under IRC § 408A, Simplified Employee Pension IRAs (SEP IRAs) under IRC § 408(k), and Savings Incentive Match Plan for Employees IRAs (SIMPLE IRAs) under IRC § 408(p).
Inherited IRA: Defined under Section 2.06 as an IRA acquired by reason of the death of another individual where the beneficiary is not the surviving spouse, as well as an IRA acquired by non-individual entities (such as estates or trusts) upon the owner’s death.
IRA Custodian: Defined under Section 2.07 as “a bank or other person (including a nonbank trustee meeting the requirements of Treas. Reg. § 1.408-2(e)) authorized to hold assets on behalf of IRA Owners.”
IRA Owner: Defined under Section 2.08 as the individual for whose benefit the IRA was established, their beneficiaries, or nonspouse beneficiaries. Crucially, for 60-Day Rollover Failures under Section 2.18, the definition of IRA Owner is expanded to include participants in IRC § 401(a) qualified plans, IRC § 403(a) annuity plans, IRC § 403(b) tax-sheltered annuities, and governmental IRC § 457(b) plans.

A key distinction exists between employer-sponsored plan arrangements and the underlying employee IRAs. Revenue Procedure 2026-33 Section 4.01(4)–(5) clarifies that plan-level failures relating to SEP Arrangements (IRC § 408(k)) and SIMPLE IRA Plans (IRC § 408(p)) are ineligible for IVCP and must continue to be resolved under EPCRS. However, individual IRA-level failures involving SEP IRAs and SIMPLE IRAs are fully eligible for participation in IVCP.

Ineligible Issues and Absolute Disqualifications

The IRS establishes strict boundaries regarding which matters and taxpayers are excluded from IVCP relief.

First, Section 2.10 provides that an “Eligible Inadvertent Failure” explicitly excludes any failure that is “egregious, relates to the diversion or misuse of IRA assets, or is directly or indirectly related to an abusive tax avoidance transaction.” An abusive tax avoidance transaction encompasses any listed transaction under Treas. Reg. § 1.6011-4(b)(2) or any other transaction identified by the IRS as abusive.

Second, under Section 4.02, IVCP is generally unavailable if the IRA Owner’s tax return (Form 1040 series or Form 1041) is “Under Examination.” Section 2.12 defines “Under Examination” broadly to include IRS audits, Criminal Investigation division investigations, verbal or written notifications of an impending examination, or cases currently in Appeals or litigation arising from an IRS examination. The sole exception is that limited 60-day rollover waiver relief under Rev. Proc. 2020-46 may remain available during an examination.

Third, Section 1.03 notes that self-correction is not permitted under ICRS at this time. All corrections require a formal submission. Furthermore, Section 5.10 explicitly prohibits anonymous submissions; full identifying information for the custodian and IRA owner must be disclosed.

Finally, Section 4.03 mandates that an IRA Owner must currently be in compliance with all tax filing obligations for Form 1040 series or Form 1041 returns to be eligible for inclusion in an IVCP submission.

Analysis of Eligible Inadvertent Failures and Safe Harbor Corrections

Appendix A of Revenue Procedure 2026-33 specifies the four exclusive categories of Eligible Inadvertent Failures currently eligible for correction under ICRS, along with their detailed safe harbor correction methods.

Required Minimum Distribution Failures

An RMD Failure is defined under Section 2.15 as an Eligible Inadvertent Failure occurring when, “due to a failure by a Service Provider, the amount that is distributed from an IRA Owner’s IRA or IRAs during the taxable year is less than the IRA Owner’s required minimum distribution (RMD) under section 408(a)(6) or (b)(3).”

To qualify for correction under Appendix A Section 2.01, the Service Provider must have had established practices and procedures routinely followed, and the failure must have resulted from oversight or mistake.

For individual retirement accounts, the safe harbor correction requires the IRA Custodian to distribute the missed RMDs along with Earnings from the date of the failure to the date of distribution. The adjusted account balance used to calculate current distributions is defined under Treas. Reg. § 1.408-8(b)(2), reduced by total missed RMDs for prior years. For individual retirement annuities, missed annuity payments must be distributed in accordance with applicable state law. Corrective distributions must be reported on Form 1099-R as taxable for the year of correction.

IRA Establishment Failures

Section 2.16 defines an IRA Establishment Failure as occurring when an IRA Owner requests that a Service Provider establish a specific type of IRA account, but due to a Service Provider error, the provider establishes an incorrect IRA type or a non-IRA account (e.g., establishing a Roth IRA instead of a requested traditional IRA).

Tax professionals must pay strict attention to the special procedural deadline imposed on this failure. Section 4.01(7) and Appendix A Section 2.02(2) establish an absolute cutoff:

“A submission to correct an IRA Establishment Failure should be made as soon as practicable after discovery of the failure, but in no event will such a submission be accepted after December 31 of the year following the year in which the incorrect account was established.”

The safe harbor correction requires the Service Provider or IRA Owner to establish the correct type of IRA requested. The custodian then transfers the account balance initially placed in the incorrect account, plus Earnings, via a trustee-to-trustee transfer into the newly established IRA. For income tax and IRA requirement purposes, the newly established IRA is retroactively treated as having been established on the original date the incorrect account was opened.

Nonspouse Beneficiary Distribution or Rollover Failures

Under IRC § 408(d)(3)(C), distributions from inherited IRAs to nonspouse beneficiaries cannot be rolled over; they must be transferred via a direct trustee-to-trustee transfer. Section 2.17 addresses situations where, due to an inadvertent error or misadvice by a Service Provider, a nonspouse beneficiary received an outright distribution or transferred funds into a non-inherited account, creating an immediate taxable event.

Appendix A Section 2.03 requires the Applicant to provide detailed written or contemporaneous documentation reflecting the Service Provider’s advice or error. The safe harbor correction permits the nonspouse beneficiary to contribute the distributed or improperly transferred amount (minus any required minimum distributions that should have been taken, plus Earnings) into a newly established Inherited IRA titled in the name of the same beneficiary.

When executed under an IRS compliance statement, the contribution is retroactively treated as a valid direct trustee-to-trustee transfer occurring on the original transfer date, rendering the original distribution a non-taxable event.

60-Day Rollover Failures

Section 2.18 defines a 60-Day Rollover Failure as an eligible rollover distribution under IRC § 402(c)(4) or an IRA distribution under IRC § 408(d)(3) that was not rolled over within 60 days, where failure to waive the 60-day limit would be against equity or good conscience.

Unlike the other three failure categories, Appendix A Section 2.04(3) stipulates that for a 60-Day Rollover Failure, the Applicant cannot be an IRA Custodian—the Applicant must be the IRA Owner (or their authorized representative under Form 2848). Furthermore, a Service Provider error is not required; eligibility is evaluated under statutory standards including casualty, disaster, hospitalization, incarceration, foreign country restrictions, or financial institution errors.

The ruling emphasizes that statutory rollover limitations remain strictly binding:

“In the case of a distribution from an IRA, a rollover to another IRA is not permitted if the taxpayer has made an IRA rollover of another IRA distribution made in the prior one-year period. The one-rollover-per-year limitation does not apply to trustee-to-trustee transfers or to conversions...”

Under the safe harbor correction, the IRA Owner deposits the distributed funds (not exceeding the original distribution less mandatory RMDs) into an eligible retirement plan under IRC § 402(c)(8). Upon approval, the deposit is treated as a timely tax-free rollover under IRC § 402(c)(3) or § 408(d)(3).

General Correction Principles and Statutory Penalty Relief

Revenue Procedure 2026-33 Section 3 sets forth core principles governing all IVCP corrections:

Restoration of Account Balance: The correction method must restore the IRA and the IRA Owner to the position they would have been in had the failure not occurred.
Consistency Requirement: Correction methods and Earnings calculation methodologies must be applied consistently across all affected years and across all accounts in group submissions.
Reasonable Estimates: Where exact earnings calculations are impossible or administratively prohibitive relative to an insignificant difference, reasonable estimates are permitted. Section 3.02(4) explicitly provides that the interest rate from the Department of Labor’s Voluntary Fiduciary Correction Program (VFCP) Online Calculator is deemed a reasonable interest rate.

One of the most valuable aspects of IVCP for tax practitioners is the ability to request explicit relief from statutory excise taxes and additional income taxes under Section 3.04:

IRC § 4973 Excess Contributions Excise Tax: In appropriate cases, the IRS will agree not to pursue the 6% excise tax under § 4973, provided the excess amount plus Earnings is removed and reported as taxable income in the year of removal.
IRC § 4974 RMD Excise Tax: The IRS will grant a formal waiver of the excise tax under § 4974 (currently 25%, reducible to 10%) directly within the compliance statement.
IRC § 72(t) 10% Additional Tax: The IRS will agree not to pursue the 10% early distribution penalty under § 72(t) where improperly distributed amounts (plus Earnings) are returned to the IRA pursuant to the compliance statement.

Regarding closed taxable years, Section 4.01(2) clarifies that an IVCP submission does not extend the statute of limitations on refunds under IRC § 6511(a). Refunds are strictly limited to open taxable years. Taxpayers facing expiring statutes of limitations during processing must file protective claims for refund under IRS Publication 556.

Procedural Mandates and User Fee Structure

Filing an IVCP submission requires strict compliance with the procedural workflow detailed in Section 5 and Section 6.

Mandatory Electronic Submission: Paper submissions are strictly prohibited. All filings must be executed electronically via the Pay.gov website using Form 15443 (Application for Individual Retirement Account/Annuity Voluntary Correction Program).
PDF Upload Requirements: All supporting narrative descriptions, calculations, penalty of perjury statements (signed by the Applicant), Form 2848 Power of Attorney, and schedules must be combined into a single PDF document not exceeding 15 MB. Supplementary materials exceeding 15 MB must be faxed under specific control number protocols.
Model Forms: Applicants may utilize the Form 15745 series (Model IVCP Compliance Statement) and Schedules 1 through 3 (Forms 15745-A through 15745-C) to standardize failure descriptions and correction methods.
Pre-Submission Conferences: Section 5.02 permits Applicants or their representatives to request an anonymous, discretionary pre-submission conference via Pay.gov to discuss complex or non-standard proposed correction methods prior to formal submission.
Group Submissions by Custodians: Section 5.12 allows an IRA Custodian to file a single group submission for systemic Eligible Inadvertent Failures affecting at least 10 IRA Owners. Custodians must provide written notice to affected owners at least 45 days prior to filing, obtain affirmative consent, provide a 150-day correction window (compared to 90 days for individual submissions), and issue formal closing notices and cover letters (Appendix B) within 30 days of completion.
User Fee Structure: Under Section 7.01, for submissions filed before January 1, 2028, the standard user fee for regular individual submissions is $3,500. For group submissions, the initial user fee is $10,000 (covering the first 10 IRA Owners), plus $250 for each additional affected IRA Owner, capped at a maximum user fee of $50,000. All fees must be paid online through Pay.gov at submission.

Upon successful review and execution, the IRS issues a binding Compliance Statement under Section 5.08, providing conclusive reliance that the IRS will not disqualify the IRA or impose targeted taxes or penalties for the identified failures and tax years.

Prepared with assistance from Gemini Notebook.