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Tips for VCP Submissions for Required Minimum Distributions

To process Voluntary Correction Program (VCP) applications as efficiently as possible, it’s important to start with a correctly completed submission. Use these tips to avoid common mistakes when completing Form 14568, Model VCP Compliance Statement, and Form 14568-H, Model VCP Compliance Statement - Schedule 8: Failure to Pay Required Minimum Distributions Timely, for a VCP submission disclosing a required minimum distribution (RMD) failure:

For defined contribution plans, describe the methodology used to determine earnings used to adjust the corrective distribution

For defined benefit plans, describe the method used to determine the additional payment
For defined benefit plans, check the applicable box and if “no,” include a copy of the plan’s adjusted funded target attainment percentage (AFTAP) actuarial certification with your submission.
 

  1. When you complete the table identifying the failure in Section I of Form 14568-H, use a separate line for each plan year the failure happened and identify for each plan year: (1) the number of affected participants, and (2) the total missed RMD amounts. It’s important to correctly identify all years of the failure.

    Example: Terry, a former participant in the ABC, Inc. 401(k) plan attained age 70 ½ in 2014. The ABC, Inc. 401(k) plan didn’t pay Terry his RMD until 2016.

    An RMD was due to Terry on April 1, 2015 (April 1 of the year following the year that Terry attained age 70 ½). To complete the table in Section I, the year of failure would be the year Terry attained age 70 ½ and every year after that the plan didn’t pay him an RMD. Therefore, the plan years of the failure are both 2014 and 2015 because his RMD was paid in 2016.

    When ABC, Inc. lists the number of affected participants and missed RMDs in Section I, they should include Terry’s missed RMD for each year of failure (2014 and 2015), and list each year on a separate line in the table.
     
  2. Only include the total amount of missed RMDs, not earnings.
     
  3. Complete Form 14568-H, Section II:

    a. For defined contribution plans, describe the methodology used to determine earnings used to adjust the corrective distribution

    b. For defined benefit plans, describe the method used to determine the additional payment

    c. For defined benefit plans, check the applicable box and if “no,” include a copy of the plan’s adjusted funded target attainment percentage (AFTAP) actuarial certification with your submission.

  4. Complete Form 14568-H, Sections III and IV

  5. Don’t forget to include all applicable items listed on the Enclosure list in Section V of Form 14568-H

  6. Complete Form 14568, Section IV, and include narrative attachments if needed that explain the method to locate and notify former participants and beneficiaries (or provide this information in another format.) Remember that the IRS Letter Forwarding Service and Social Security Letter Forwarding Service programs are no longer available for this purpose.

  7. If requesting excise tax relief under Internal Revenue Code Section 4974, indicate on Form 14568, Section VI, by checking the applicable box and provide the failure number for which you’re requesting it. Don’t leave the failure number blank.