Plan sponsors may use this Voluntary Correction Program (VCP) Submission Kit if they failed to make timely required contributions to money purchase pension plans (MPP) or target benefit pension plans (defined contribution plans).
Filing and IRS approval of this submission kit, however, doesn't correct other failures in your plan. For example, not: amending the plan for major legislation; adopting required amendments for subsequent tax law changes; and operating the plan according to its written terms.
As a plan sponsor, you'll need to take additional steps to correct any other failures. The Correcting Plan Errors page has helpful resources.
- Money purchase pension plans and target benefit plans are subject to the minimum funding standards of IRC Section 412 and IRC 430, if applicable.
- Funding of these plans by a plan sponsor is not discretionary. If you did not make the required contributions to these plans in a timely manner, you did not operate the plan in accordance with its written plan document.
- A failure to operate the plan in accordance with its written terms means the retirement plan is no longer entitled to tax-favored treatment.
- The loss of tax-favored treatment may reduce the deduction for contributions paid to the plan and participants would not be allowed to accumulate retirement savings.
- While not required by the IRS or the federal tax code, the financial institution holding the plan assets may refuse to make distributions or if it does make distributions, those distributions would be taxable and ineligible for tax-free rollover.
- Plan sponsors can restore the tax-favored status of your MPP or target benefit plan by correcting the failure under the Employee Plans Compliance Resolution System (EPCRS). Make a submission and use the Voluntary Correction Program (VCP) to fix the operational failure if you want IRS assurance that your correction proposal is acceptable or if the Self Correction Program (SCP) is not available.
- EPCRS, including the VCP, will not resolve any excise tax that may be owed under IRC 4971.
Prepare and Collect VCP submission Documents
Include these items in your VCP submission (see below for detailed instructions on completing each item):
- Form 14568, Model VCP Submission Compliance Statement. This form is a model compliance statement. Use attachments to explain the failure, how you'll correct it, and what steps you'll take to make certain the error will not occur again.
- Narrative attachments for Form 14568 section II-Applicant's Description of Failures, section III-Applicant's Description of the Proposed Method of Correction, section IV-Applicant's Proposed Procedures to Locate and Notify Former Employees or Beneficiaries, and section V-Applicant's Proposed Revision to Administrative Procedures. See details below as to what should be in each item.
- A copy of the signed and dated plan document (or the relevant portion of the plan document) that was in effect when the failure occurred.
- Calculations that show how corrective contributions amounts, including the impact of earnings were determined.
- If applicable Form 2848, Power of Attorney and Declaration of Representative (Instructions) or Form 8821, Tax Information Authorization. See additional details below
- All completed documents will have to be converted to PDF documents.
- Combine all documents in this list into a single PDF file. If combined file exceeds 15MB, remove some documents so that it does not exceed this limit. The documents that could not be included in the combined PDF file can be faxed to the IRS. See additional details below.
Completing Form 2848 or 8821
- Form 2848 - Include a completed and signed Form 2848 with your submission if you want an attorney or other eligible person to represent you in communications with the IRS about this VCP submission. If your submission doesn't included a Form 2848, the IRS will contact the individual who signed Form 8950 or the employee named in Item 2 of Form 8950 if you included a completed Form 8821.
- Form 8821 - If you want to authorize an individual to receive copies of correspondence from the IRS relating to this submission (but not to represent you or respond to IRS requests for information), complete and include a Form 8821.
- In the Matters section of Form 2848 (or the Tax Matters section of Form 8821), enter “Voluntary Correction Program (Rev. Proc. 2018-52)” under “Description of Matter.” Enter “8950” under “Tax Form Number,” and enter “N/A” under “Years or Periods or leave it blank.”
Completing Form 14568
Section I. Plan Information
Item 1: Enter the name of the plan sponsor. This should match the name reported on Forms 8950 and 8951 that are part of this VCP submission.
Item 2: Enter the Employer Identification Number of the plan sponsor. Do not enter a Social Security Number. If the sponsor doesn’t have an EIN, you can obtain one instantly on this website.
Item 3: Enter the three-digit plan number chosen by the plan sponsor. If the sponsor has only one retirement plan, this number will usually be 001. This should match the plan number reported on Form 8950.
Item 4: Enter the full name of the plan, as shown on the written plan documents and Form 8950.
Part I, Section II. Applicant's Description of Failures - In the empty space provided, enter "See Attachment to Form 14568."
Part I, Section III. Applicant's Description of the Proposed Method of Correction - In the empty space provided, enter "See Attachment to Form 14568."
Part I, Section IV. Applicant's Proposed Procedures to Locate and Notify Former Employees or Beneficiaries -- In the empty space provided, enter "See Attachment to Form 14568."
Part I, Section V. Applicant's Proposed Revision to Administrative Procedures - In the empty space provided, enter "See Attachment to Form 14568."
Part I, Section VI and VII - Do not make any marks in Section VI or Section VII.
Completing Narrative attachments for Form 14568
- Headings: Include the plan name, the EIN of the plan sponsor and the plan number on every page.
- Label each attachment so that it corresponds with the applicable Section of Form 14568. Label your attachment with the related Form section and title.
Form 14568, Section II. Identification of Failures
Describe the failure - For example: "The plan sponsor failed in operation to make timely contributions to the plan as required by the written terms of the plan document."
The description should include the following:
- State the plan year or years for which contributions were not made
- Amount of the deficiency
- Number of participants who should have received a contribution
- Explain why the failure occurred
Form 14568, Section III. Description of Proposed Method Correction -
Describe the correction method applicable to each failure listed on the attachment for Section II. Include the following information:
- The amount of the corrective contribution made (or to be made) to the plan. Include an explanation of how this amount was determined.
- The date that the late contribution was made
- The interest rate used to determine the lost earnings. Include an explanation of how this rate was determined.
The goal in making the correction is to bring the plan back to the position it would have been if the failure had not occurred. In other words, lost earnings must be paid to the plan.
Form 14568, Section IV. Applicant's Proposed Procedures to Locate and Notify Former Employees or Beneficiaries
- If you have NO affected former employees: In the space provided, write “No former employees or beneficiaries were affected by the failure described in Section II or will be affected by the correction described in Section III.”
- If you DO have a former employee or beneficiary entitled to missed contributions: On a separate attachment, describe how you will locate your former employee using acceptable methods for locating lost participants.
Form 14568, Section V. Change in Administrative Procedures
Describe the measures that will be put in place to make certain that the future contributions will be timely made to the plan (i.e., by the due date of the plan sponsor's tax return plus extensions if the return was extended)
VCP User fee
VCP submissions are not free. A user fee must be paid by the employer who sponsors the retirement plan that was not timely amended. The applicable user fee is based on the total amount of assets in your plan. See the VCP Fee Schedule.
Make your VCP submission via Pay.gov
- Go to www.Pay.gov and create an account
- After signing in, search for Form 8950, Application for Voluntary Correction Program
- Click on the link that will take you to the pay.gov version of Form 8950
- Follow the Form 8950 Instructions and these specific tips when completing Form 8950 on pay.gov:
Item 1: You must include the NAICS Business Code. Select the applicable code for your type of business. A list of applicable codes will appear when you click on the "?" that is right abode the place where the code must be entered. If you file a Form 5500 series return for the plan, simply copy the NAICS number that was listed on that form.
Item 2: If you're completing and signing the form but want us to directly contact a different employee of the plan sponsor for additional information, enter the appropriate individual's contact information and include a completed Form 8821. If a Form 2848 is included, check the appropriate box and do not enter any other information for Item 2.
Item 3: Check the box for "VCP regular submission"
Item 4: Enter the name of the plan, the three-digit plan number, number of plan participants, and amount of plan assets
Item 5: Check the box associated with the type of retirement plan
Item 6: Generally, check the box for "No" for item 6a, the user fee amount will be determined automatically based upon the amount of plan assets you typed in item 4. However, see the instructions if the VCP submission concerns a terminating orphan plan.
Item 7: Check the box for "Yes."
Items 8 through 11: Answer all questions. Include any requested attachments.
Item 8: See the Abusive Transactions webpage for more information on transactions that affect the availability of correction programs under EPCRS.
Signature block: Form 8950 must be signed by an owner of the plan sponsor or an employee authorized to sign documents for the plan sponsor. See instructions for Form 8950 for more information on "Who Must Sign." Simply check the box and type your name, title, and date fields. If you have an attorney, you have the option to permit them to make this submission and sign the form on your behalf. See Instructions.
5. Upload the PDF file that contains all of the completed VCP submission documents listed above.
6. Pay the applicable user fee via debit/credit card, or from a checking/savings account via an ACA transfer
7. At the end of the submission process pay.gov will generate a receipt with a Pay.gov Tracking ID #. Retain this receipt. The Pay.gov Tracking ID # is the IRS control number assigned to your submission.
8. If you have some required VCP submission documents that could not be uploaded to pay.gov due to the 15MB file size limitation, fax them to the IRS at 855-203-6996.
What happens next?
- reviews the VCP submission for completeness and may return it to you if there's missing information or if it's substantially incomplete.
- assigns a complete VCP submission to a specialist for review. We'll contact you (and your authorized representative if applicable) by mail of phone if we have questions.
- on approval, sends you a signed version of the Model Compliance Statement you submitted (Form 14568 and incorporated attachments). This document is your VCP compliance statement.
Expect to receive your compliance statement approximately four to six months after making your submission to the IRS via the pay.gov website. If you haven’t received it after six months, you may call 626-927-2011 (not a toll-free number) to check on the status of your submission.
Keep your signed compliance statement and other VCP submission documents in a safe place. If the IRS later audits your plan, the compliance statement shows you corrected the failure you identified through the VCP. A financial institution holding plan assets may also ask to see a copy of the compliance statement.
Why do I have to make an annual required contribution to a money purchase pension plan or target benefit plan when I am not required to do the same for my profit sharing plan?
MPP plans, target benefit plans and defined benefit plans are subject to the minimum funding standards of IRC Section 412. Funding of these plans by a plan sponsor is not discretionary. A profit sharing plan is not subject to these minimum funding standards.
When is a contribution to a money purchase pension plan or a target benefit plan considered untimely, thus causing the plan to be disqualified?
Contributions to these types of plans must be made by 8 ½ months after the last day of the plan year that ends with or within the employer's tax year. For example, if the 2013 plan year was a calendar year, and the tax year was also the calendar year, then the due date for the 2013 plan year contributions was September 15, 2014.
If a plan is no longer qualified under the Internal Revenue Code, then the employer may lose deductions for contributions paid to the plan, in addition to other consequences. See Tax Consequences of Plan Disqualification
If my MPP plan or target benefit plan is no longer qualified, what can I do to get it qualified again?
In order to bring your MPP Plan or target benefit plan back into compliance with the tax law, you must correct the failure that led to the loss of qualification. You must either self-correct the problem, applying the principles of self correction outlined in the Employee Plans Compliance Resolution System (EPCRS), or make a submission to the Voluntary Correction Program under EPCRS. The specific details of EPCRS can be found in IRS Revenue Procedure 2018-52. You can read general overviews of the Self-Correction Program and the Voluntary Correction Program.
Can I self-correct a failure to make timely required contributions, or must I make a submission under the VCP?
In some cases you may be able to self-correct without contacting the IRS. For more information on which failures may be eligible for self-correction, see the Self-Correction Program FAQs and Retirement Plan Errors Eligible for Self-Correction.