Voluntary Correction Program (VCP) – General Description


If your retirement plan isn’t currently being audited by the IRS, and you have mistakes with either the language in the plan document or how you’ve run your plan, you can apply to correct the mistakes under the Voluntary Correction Program (VCP):

  • Send a written submission to the IRS and pay the user fee charged for VCP applications.
  • The IRS reviews and approves your proposed correction methods for either the plan document or operational errors that, if not corrected, could result in the plan losing its tax-favored status.

The VCP is one of three correction programs you can use to correct errors under the Employee Plans Compliance Resolution System (EPCRS). The other two EPRCS programs are the Self-Correction Program (SCP) and the Audit Closing Agreement Program (Audit CAP).

Why use VCP?

Correcting your plan mistakes through VCP preserves the plan’s tax-favored status. Retirement plans that are not tax-favored or “qualified” have significant costs that directly affect the plan, its participants and your business. See Tax Consequences of Plan Disqualification for the effects of having a nonqualified retirement plan.

A tax-favored retirement plan (401(k) or other qualified plan, 403(b), SEP or SIMPLE IRA) generally loses its tax-favored status if “failures” occur. Examples of failures are situations where the plan sponsor fails to take certain actions, which include:

  • Maintaining a valid, up-to-date plan document.
  • Following the terms of the plan document while operating the plan.
  • Complying with federal tax law requirements while operating the plan.

VCP helps by allowing you to:

  • Obtain a written agreement, called a compliance statement, showing that the IRS approved your proposed correction method.
  • Bring your retirement plan back into compliance with federal tax law.
  • Provide the benefits communicated to your employees in your written plan document.
  • Protect your tax deductions.
  • Ensure that participants’ retirement savings continue to accumulate tax-deferred.
  • Avoid unfavorable tax consequences that would normally result from the disclosed failures (if you complete all corrective actions described in the compliance statement by the stated deadlines).
  • Avoid paying the larger closing agreement sanctions that would apply if an IRS audit or determination letter application review discovers the failures.
  • Request relief from certain federal income or excise taxes associated with certain plan errors.

Compared to the Self-Correction Program (SCP), reasons to use VCP include:

  • Some failures are not eligible for SCP.
  • Sponsors may prefer a written IRS approval even to correct failures that are eligible for SCP.
  • Certain federal income and excise tax relief is available under VCP but not under the SCP.

How does VCP work?

  1. You make a VCP submission to us.
  2. We review the failures and correction methods that you identify. We won’t look for failures not described in the VCP submission.
  3. If we need more information, we contact you, and if applicable, your representative.
  4. If your submission includes all of the necessary information and we approve the proposed correction: we send you a compliance statement in which we state that, if you complete the approved correction within 150 days, we will generally not seek to disqualify the plan because of the disclosed failures.
  5. If we do not approve the proposed correction method, we work with you and your representative to find an acceptable correction.
  6. If we can’t agree on a reasonable and appropriate correction, then we don't issue a compliance statement or refund any paid user fees.
  7. Except under unusual circumstances, we don’t audit your plan while considering your VCP submission.

Steps to using VCP

  1. Find the failures – review the plan document and your plan’s operations to determine what failures have occurred.
  2. Submit – voluntarily report the problem in a VCP submission. Describe the failures and the methods you’ll use to correct them and prevent them from happening again. Pay the user fee.
  3. Correct – fix the failures before or after you file the submission. The compliance statement includes a 150-day deadline by which you must complete all corrective actions. Note, that if you correct the failures before you submit, you may have to undo the correction if we don’t approve the method you used.
  4. Keep records – save your files, including the compliance statement and the documents that prove corrections were completed before the deadline. Store them with your plan document.

Find the failures

You may find plan mistakes via an internal audit, or when your adviser or a third-party administrator reviews the plan’s written document and its operations. See IRS Fix-It Guides for common failures and suggested ways to find and correct them for different types of plans.


To make a VCP submission to the IRS:

  1. Go to Pay.gov and establish an account if you do not already have one.
  2. Create a PDF file that includes:
    • A description of the failures to be corrected.
    • A description of the corrective actions that the sponsor proposes to take.
    • A description of the changes in its administrative procedures that the plan sponsor will adopt to prevent the failures from happening again.
    • Various other documents listed in the EPCRS Revenue Procedure PDF which states what to submit and how to organize it.
  3. Go to Pay.gov to complete and sign Form 8950.
  4. Upload the PDF file that contains the VCP submission documents and pay the user fee using a credit or debit card or a checking or savings account.
  5. Obtain a receipt that contains a Pay.gov Tracking ID which is also the case or control number that has been assigned to your VCP submission.
  6. Learn the value of a complete submission and check on your VCP submission status.

User fees for VCP

The VCP user fee is typically based on the amount of assets in the plan, ranging from $1,500 to $3,500.

Alternative fees apply to Group VCP submissions, submissions involving terminating orphan plans and IRC 457(b) plans.

Help! Do I have to write all this out myself? 

Some sponsors hire an attorney or accountant to prepare their submissions. However, that is not always necessary.

Model submission documents - We created model documents using special tax forms that prompt you for all the necessary information, including the descriptions of the failures, corrections, and changes in administrative procedures. We recommend that you use these model documents:

  • Form 14568 - Model VCP Compliance Statement - use to report any failure. Use attachments to the form to describe the failures and proposed methods of correction.
  • Form 14568-A through I - Model VCP Compliance Statement Schedules – use to report and resolve some very specific common failures.

Certain tax relief and VCP

Some plan failures (and some appropriate corrections) cause a participant or the plan sponsor to be liable for an excise tax or additional income tax. In your VCP submission, you can ask that we not pursue certain excise taxes or certain additional income taxes that a plan sponsor or participant would be liable for because of either a failure or a correction.


To obtain our approval, the plan sponsor generally must fully correct the failure. Usually, this means that the plan and the participants must be placed in the same position they would’ve been in if the failure had not occurred.

Example: The plan sponsor didn’t make a contribution required by the plan document. Full correction would be to make the required contribution plus an additional amount to reflect the lost earnings during the period from the date the contribution should’ve been made through the date the corrective contribution is made.

Correction principles and methods

The EPCRS revenue procedure offers general guidance on how to correct failures and includes details on some correction methods that are acceptable.

  • For general correction principles, see Revenue Procedure 2021-30, Section 6.
  • For correction methods that we’ve already approved for many common failures, see Revenue Procedure 2021-30, Appendices A or B of exclusion of eligible employees, missed contributions, failed ADP/ACP tests, etc.

Proposing your own correction method

You may propose your preferred correction method for our consideration if either:

  • The EPCRS Rev. Proc. doesn’t describe an approved correction method for your failure, or
  • You prefer to use a different correction method that is reasonable and appropriate. Some sponsors in this situation choose to file a submission anonymously through their representative. We don’t ask for the identity of an anonymous submitter unless all parties agree that the correction is acceptable.

Keep records

Your compliance statement:

  • Is our agreement to not disqualify your retirement plan because of the failures you have reported and corrected.
  • Doesn’t protect your plan from the effects of other failures that IRS may discover during an audit or a determination letter application review.
  • Doesn’t affect participants’ or beneficiaries’ rights under the plan.

Keep the compliance statement and documents that prove corrections were completed before the deadline with your other plan-related records. We may ask for a copy if your plan is ever audited. Your financial institution and potential investors in your business may also want to see it.

What can't you fix under VCP?

Because VCP, SCP and Audit CAP can be used to correct failures that could result in a plan losing its tax-favored status, refer to these other programs for other retirement plan problems:

Additional resources