VCP Submission Kit – Plan Sponsor Not Eligible to Sponsor a SIMPLE IRA Plan Under IRC 408(p)

 

Plan sponsors may use this Voluntary Correction Program (VCP) Submission Kit if they:

  • Aren't eligible to sponsor a SIMPLE IRA Plan, because they have too many employees, or
  • Can't sponsor a SIMPLE IRA Plan, because they maintain another type of retirement plan.

The Simple IRA Plan Fix-it Guide describes these two problems in more detail.

Receiving IRS approval of this submission kit, however, doesn't correct other failures in your plan, like the failure to:

  • Limit contributions made to the SIMPLE IRA plan in accordance with IRC Section 408(p)
  • Update your SIMPLE IRA plan document for current law changes
  • Operate the SIMPLE IRA plan according to its written terms
  • Admit all eligible employees.

As a plan sponsor, you'll need to take additional steps to correct any other failures. The Correcting Plan Errors page has helpful resources.

Prepare and Collect VCP Submission Documents

Include these items in your VCP submission (see below for detailed instructions on completing each item):

  1. Form 14568, Model VCP Submission Compliance Statement PDF. 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.
  2. Form 14568-D, Schedule 4, SIMPLE IRAs PDF This form describes the failure and how it's been corrected.
  3. A signed copy of the applicable SIMPLE plan document in effect at the time of the failure. This could be an IRS form document such as Form 5304-SIMPLE PDF or Form 5305-SIMPLE PDF, or a prototype developed by a financial institution.

If applicable, complete Form 2848, Power of Attorney and Declaration of Representative PDF (Instructions for Form 2848 PDF) or Form 8821, Tax Information Authorization PDF (Instructions for Form 8821 PDF). 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 the combined file exceeds 15MB, remove some documents so it doesn’t exceed this limit.  The documents that could not be included in the combined PDF file can be faxed to the IRS at 855-203-6996.

Complete 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 your VCP submission. If your submission doesn't include 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.
  • Under "Acts Authorized" on line 3 of Form 2848 (or the "Tax Information" section of Form 8821), enter "Voluntary Correction Program (Rev. Proc. 2021-30)" under "Description of Matter" or "Specific Tax Matters." Enter "8950" under "Tax Form Number," and enter "N/A" under "Years or Periods" or leave it blank.
  • Complete Item 5 of Form 2848 if you wish your representative to make the actual VCP submission via the Pay.gov website on your behalf. Check the box next to "Other acts authorized." Enter the following: "Signing and filing of the Form 8950 and accompanying documents as part of a VCP submission."

Complete Form 14568

Part I, Section I. Plan Information

Item 1: Enter the name of the plan sponsor. This should match the name reported on Form 8950 that is part of this VCP submission.

Item 2: Enter the plan sponsor's Employer Identification Number. Do not enter a Social Security Number. If the plan sponsor doesn't have an EIN, you can obtain one instantly on this website.

Item 3: Enter a three-digit plan number. Generally, SIMPLE IRA plans don't have a plan number, so enter "990," which should also match the plan number reported on Form 8950.

Item 4: Enter the full name of the plan, as shown on Form 8950. It's usually "(the name of the of your company) SIMPLE IRA Plan."

Part I, Section II. Applicant's Description of Failures

In the empty space provided, enter "See Form 14568-D."

Part I, Section III. Applicant's Description of the Proposed Method of Correction

In the empty space provided, enter "See Form 14568-D."

Part I, Section IV. Applicant's Proposed Procedures to Locate and Notify Former Employees or Beneficiaries

In the empty space provided, enter "No former employees or beneficiaries were affected by the failures and correction described in Section II and Section III." Do not leave this section blank.

Part I, Section V. Applicant's Proposed Revision to Administrative Procedures

In the empty space provided, enter "See Form 14568-D."

Part I, Sections VI and VII

Do not make any marks in Section VI or Section VII.

Completing Form 14568-D

  • Headings: Include the plan name, the EIN of the plan sponsor and the plan number on every page.
  • Include all pages: Include every page of the form.
  • Do not modify: Don't change the language or formatting of the form.

Form 14568-D, Section I. Identification of Failures

Item A, Employer Eligibility Failure - Check the box next to: "A. Employer Eligibility Failure." Then,

  • Check the appropriate box that explains why the plan sponsor is not eligible to maintain the SIMPLE IRA plan, and
  • List the specific plan years for which the employer was not eligible to sponsor the plan.

Item A, Description of the Proposed Method of Correction – Enter the date all contributions to the plan stopped. This date can't be any later than the date the VCP submission is made to the IRS.

Form 14568-B, Section II. Change in Administrative Procedures

Enter a brief description of the changes to the plan operating procedures you implemented or will implement to prevent similar failures from happening in the future. Do not leave this section blank.

Examples of some administrative procedure changes might include:

  • providing additional training for employees responsible for maintaining the plan, and
  • hiring external legal counsel or other professionals to help make sure the employer is adopting the right type of retirement plan.

VCP User fee

VCP submissions are not free. A user fee must be paid by the employer who sponsors the retirement plan that needs to be corrected using VCP. 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 

1. Go to Pay.gov and create an account.

2. After signing in, search for Form 8950, Application for Voluntary Correction Program.

3. Click the link that will take you to the Pay.gov version of Form 8950.

4. Follow the Form 8950 Instructions PDF 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 the question mark directly above the NAICS Business Code entry box. If you file a Form 5500 series return, simply copy the NAICS number shown on that form.
  • Item 2: If you're completing and signing the form but want us to directly contact a specific employee 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. The three-digit plan number should be "990." The amount of assets is the total current value of all individuals who have IRA accounts associated with the SIMPLE IRA plan.
  • Item 5: Check the box associated with the type of retirement plan.
  • Item 6: Check the box for "No" for item 6a. The user fee amount will be determined automatically based on the amount of plan assets listed in item 4.
  • Item 7: Check the box for "Yes."
  • Item 8: Answer the question and attachment an explanation (if applicable). See the Abusive Transactions webpage for more information on transactions that affect the availability of correction programs under EPCRS.
  • Items 9 through 11: Answer all questions. Include any requested attachments.
  • 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 complete the 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 Form 8950 Instructions  PDF.

5. Upload the file that contains all the completed VCP submission documents listed above.

6. Pay the applicable user fee via debit/credit card or a checking/savings account using ACH transfer.

7. At the end of the submission process, Pay.gov will generate a receipt with a Pay.gov Tracking ID number. Keep this receipt. The Pay.gov Tracking ID number is the IRS control number assigned to your submission.

8.  If you have 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?

The IRS:

  • reviews the VCP submission for completeness.
  • assigns a complete VCP submission to a specialist for review. We'll contact you (and your authorized representative, if applicable) by mail or 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 four to six months after making your submission to the IRS. 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 compliance statement and signed plan document 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.

Additional resources