Correcting Plan Errors – Voluntary Correction Program (VCP) – General Description
A Plan Sponsor that maintains a plan that experiences one or more Qualification Failures may seek to preserve the tax benefits of its retirement plan. If the plan sponsor discovers the problems prior to the plan (or the plan sponsor, if the plan sponsor is a tax-exempt organization) coming under Examination, it may bring such failures to the attention of the IRS through the Voluntary Correction Program (VCP). In such cases, the plan sponsor pays a fee to preserve the tax benefit associated with properly maintained retirement plans, but in virtually all cases, the fee, which is based on the size of the plan, is equal to only a small fraction of the amount of tax benefit preserved.
The VCP procedures may be used by Plan Sponsors who cannot, or do not wish, to resolve their plans’ Qualification Failures under the
Learn more about how to correct plan errors.