Voluntary Correction Program Fees for Multiple Failures
The fee for your Voluntary Correction Program (VCP) submission with multiple plan failures will vary depending on the circumstances. For example, if:
- any one of the failures is not eligible for a discount, the fee is the amount listed in the general fee schedule.
- you have more than one failure that is eligible for a discount, the fee is the lesser of the:
- sum of the discount fees, or
- amount listed in the general fee schedule.
The general VCP compliance fees for sponsors of a qualified or 403(b) plan are listed in a general fee schedule and are based on the number of plan participants However, you may qualify for discounts in certain circumstances or for certain plan errors. For example:
- Not making required minimum distributions for 50 or fewer participants
- Certain loan failures
- Orphan plans
- A 403(b) plan sponsor’s failure to adopt a written plan
- Not amending a plan for certain amendments by the required deadlines
More than one discount
If your VCP submission covers more than one plan error that qualifies for a discount:
- Compare the sum of the discounted fees to the general schedule fee for your plan and pay the lesser amount.
- Don’t file multiple VCP submissions (a separate submission for each error).
Example 1: Your plan has 19 participants. You make a VCP submission for a failure to:
- adopt an interim amendment by the required deadline qualifying for a reduced fee of $375.
- comply with the minimum distribution rules qualifying for a reduced fee of $500.
The sum of the discounted fees is $875 ($375 + $500), compared with the $750 fee listed in the general fee schedule for a plan with 19 participants. You should pay the lesser of the two, or $750.
Example 2: The same facts in example 1, except the plan has 25 participants and the employer has a third failure because it didn't timely adopt an amendment required by the plan’s favorable determination letter. This third failure is also eligible for a discounted fee of $500.
The sum of this plan’s discounted fees is now $1,375 ($375 + $500 + $500), compared with the $1,000 fee listed in the general fee schedule for a plan with 25 participants. You should pay the lesser of the two, or $1,000.
Reporting your fee on Form 8951
You must file a Form 8951, Compliance Fee for Application for Voluntary Correction Program (VCP), with your VCP submission, and complete:
- Line 7, if the amount listed in the general fee schedule applies to your plan
- Line 8(a) – (f), if your submission is solely for plan failures that qualify for one or more discounted fees, and the total of the discounted fees is less than the amount listed for your plan in the general fee schedule, or
- Line 8(g) – (j), if your submission qualifies for a discounted fee listed