Most submissions made under VCP are subject to a user fee and such fees fall under IRC section 7528. User fees for VCP submissions are based solely upon the amount of total net assets in the retirement plan (including SEPs/SARSEPS/SIMPLE IRAs). Refer to, Revenue Procedure 2019-4 for additional information and Appendix A.09 for specific user fee amounts. The user fee will be paid via the Pay.gov website as part of making a VCP submission to the IRS.
VCP fees* based on net plan assets (effective for submissions made on or after January 1, 2019)
|$0 to $500,000
|Over $500,000 to $10,000,000
*The IRS reserves the right to issue a special closing agreement in lieu of a compliance statement order in order to impose a sanction that may be larger than the VCP user fee in the following circumstances:
- A correction methodology that permits excess amounts to remain in effected SEP/SARSEP/SIMPLE IRAs
- Any submission where the failures are egregious or intentional
- An additional amount that a Plan Sponsor may pay as a condition for the IRS to not pursue some or all of the 10% additional tax under section 72(t)
- See Rev. Proc. 2018–52, sections 4.10(3), 6.09(6), 6.11(5) & 11.07.
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. 2018–52, sections 4.08 & 11.04(14).||Fee may be waived|
|Group Submissions||Special type of VCP submission authorized per Rev. Proc. 2018-52, 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.|