You must enclose full payment of the appropriate compliance fee by check made payable to “United States Treasury.” Attach the check and a photocopy of the check to your completed a Form 8951. We will return any submissions that do not include payment of the required fee.
The system of determining VCP fees has changed. Most VCP submissions made in 2018 are subject to a new simplified fee structure based solely upon the amount of total net assets in the retirement plan (including SEPs/SARSEPS/SIMPLE IRAs). Fees associated with VCP are user fees subject to IRC Section 7528. Refer to, Revenue Procedure 2018-4, for additional information and Appendix A.09 for specific user fee amounts.
VCP fees* based on net plan assets (effective for submissions made on or after January 2, 2018)
|$0 to $500,000
|Over $500,000 to $10,000,000
*For SEP/SARSEP/SIMPLE IRAs, the IRS reserves the right to impose a sanction that may be larger than the VCP user fee if excess amounts remain in the SEP/SARSEP/SIMPLE IRAs or if the failures are egregious or intentional. See Rev. Proc. 2016–51, sections 4.10(3) & 6.11(5).
Determining net plan assets
The amount of net plan assets is determined from the most recently filed Form 5500-series return. If your plan isn’t required to file a Form 5500-series return, use the total amount of plan assets as of the last day of the most recently ended plan year. If the information is not available when mailing the VCP submission to the IRS, you may use the most recently ended plan year for which the amount of total plan assets is available. This exception doesn’t apply for VCP submission mailed to the IRS more than seven months after the close of the most recently ended plan year. For SEP/SARSEP/SIMPLE IRAs, the amount of plan assets is the total value of all plan participants’ IRA account balances associated with the plan.
Exceptions to Asset Based VCP fee
|Orphan plans||If a written request is included with the VCP submission, the IRS has discretion to waive the fee in appropriate cases if the plan is a terminating orphan plan. See Rev. Proc. 2016–51, sections 4.08 & 11.03(13).||Fee may be waived|
|Group Submissions||Special type of VCP submission authorized per Rev. Proc. 2016-51, section 10.10.||The initial fee is $10,000. An additional fee is due equal to $250 for each plan affected in excess of 20 plans. Maximum compliance fee for a group submission is $50,000.|
|457(b)||These plans are resolved outside of VCP and are not subject to VCP User Fees||Subject to a negotiated closing agreement sanction. No upfront payment required.|
Reporting fees on Form 8951
You must file a Form Form 8951, User Fee for Application for Voluntary Correction Program (VCP), with your VCP submission, and complete:
- Lines 1 through 5
- Line 7, if the general fee applies to your 401(a) or 403(b) plan and a reduced or alternative fee does not apply. Simply type in the fee amount you are submitting. Do not complete this item if you will be completing Line 8.
- Line 8, if your submission qualifies for a reduced or alternative fee. Check the applicable box(s) and type in the fee amount you are submitting. Do not complete this item if you have completed Line 7.