Form 8951 - Compliance Fee For Application For Voluntary Correction Program (Vcp) Page 4
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Form 8951 (Rev. 8-2014)
Page
Example. Multiple Employer Plan
• Line 8(i). Section 12.02(4) gives the IRS
• Line 8(b). The VCP submission is
limited to late non-amender failures
discretionary authority to waive the
TTDY has 3 participating companies.
The most recently filed Form 5500
described in section 6.05 and the VCP
compliance fee in the case of a
shows the plan has 5,335 participants.
submission is made within a 1-year
terminating orphan plan, if requested.
Plan participants are divided among the
period following the expiration of the
See section 5.03 for a definition of an
orphan plan. A VCP applicant who is an
companies in the following manner:
plan's remedial amendment period for
complying with such changes. The
eligible party as defined in section 5.03
Corporation A has 125 participants
general compliance fee is reduced by
can request that the compliance fee be
Corporation B has 10 participants
50%. See Section 12.03(1).
waived. Include a written explanation
Corporation C has 5,200 participants
that explains why a waiver should be
• Line 8(c). The VCP submission relates
Assume Corporations A and B
granted (see section 11.03(13)).
to a failure to comply with Internal
incorrectly excluded eligible employees
Step 4: If a VCP submission consists
Revenue Code (IRC) section 401(a)(9)
from the plan by not providing the proper
minimum distribution rules affecting 50
of failures limited to lines 8(a) through
information to the plan administrator due
or fewer plan participants. The
8(e) and if lines 8(f) through 8(i) are not
to flaws in their respective HR and
compliance fee is reduced to $500 (see
applicable, then the compliance fee
payroll processes. Corporation C
section 12.02(2)).
amount will be the lesser of: the sum of
properly included all eligible employees
the reduced compliance fee amounts or
and had no failures. A VCP submission
• Line 8(d). The VCP submission relates
the general compliance fee amount. See
will be submitted to the Service to
to a failure of participant loans to comply
section 12.04. If the general compliance
resolve these operational failures. The
with IRC section 72(p)(2) rules affecting
fee amount is lower, simply check the
no more than 25% of plan participants in
general compliance fee for a VCP
appropriate box on line 7 and do not
submission would normally be $20,000
any of the years in which the failure
check any of the boxes on line 8. If the
given the participant count reported on
occurred. The general compliance fee is
total of the applicable reduced fee
the Plan's latest filed Form 5500.
reduced by 50% (see section 12.02(3)).
amounts is less than the general
However, the plan administrator for
• Line 8(e). The VCP submission relates
compliance fee amount, check the
Multiple Employer Plan TTDY chooses to
to a failure to timely adopt an
applicable boxes on line 8 and include a
calculate the general compliance fee
amendment (upon which a favorable
worksheet showing how you determined
separately for each affected employer
determination letter is conditioned)
the compliance fee amount for your
based on the participants attributable to
within the applicable remedial
submission.
that employer because the plan
amendment period, provided the
Example 1. Plan sponsor of XYZ
administrator believes the filing satisfies
required amendment is adopted within 3
401(k) Plan requests a compliance
the conditions discussed in section
months of the expiration of the remedial
10.12. The general compliance fee in this
statement to correct (i) 401(a)(9)
amendment period for adopting the
situation is determined in the following
minimum distribution failures (affecting
amendment. The compliance fee is
no more than 50 participants), (ii) late
manner:
reduced to $500 (see section 12.03(3)).
adoption of interim amendments, and (iii)
Corporation A has 125 participants, so
• Line 8(f). The VCP submission is limited
nonamender failures (submitted within
the general compliance fee calculated
to a request for a minor modification of a
one year after the remedial amendment
for this employer is $5,000.
previously issued compliance statement
period has expired). The sponsor reports
and the request is mailed to the IRS
Corporation B has 10 participants, so
300 plan participants on Line 5. The
the general compliance fee calculated
before the end of the correction period
required compliance fee is $3,375,
for this employer is $750.
provided for in the compliance
calculated as follows: (i) $500 (for 401(a)
statement. The compliance fee for the
Adding these two amounts together, the
(9) failures), plus (ii) $375 (for interim
request is the lesser of: 50% of the
total general compliance fee for this
amendment failures), plus (iii) $2500 (for
original compliance fee or $1,500 (see
submission is $5,750.
nonamender failures (based on 50% of
section 10.07(10)).
the general $5,000 compliance fee for
Step 3: If any of the reduced
• Line 8(g). The compliance fee for a
plans with 101 to 500 participants)).
compliance fee amounts are appropriate
SEP, SARSEP, or a SIMPLE IRA VCP
for your VCP submission, check the
Example 2. Assume the same facts as
submission is generally $250 (see
applicable boxes on line 8. However, if
Example 1, except the plan sponsor
section 12.06).
(1) you cannot mark any of the boxes in
reports 40 participants on Line 5. The
lines 8(g) through 8(i) for your
• Line 8(h). If the VCP submission is a
required compliance fee is $1,000,
group submission from an eligible
submission, and (2) your submission
calculated as follows: Pay the lesser of (i)
organization as defined in section
involves one or more failures that are not
the general $1,000 compliance fee for
described in lines 8(a) through 8(f), then
10.11(2), the general compliance fee is
plans with 21 to 50 participants or (ii)
you are not eligible for a reduced
not applicable. The compliance fee for a
$1,375, calculated as follows: $500 (for
compliance fee amount (even if your
group submission is based on the
401(a)(9) failures), plus $375 (for interim
submission includes one or more failures
number of plans affected by the failure
amendment failures), plus $500 (for
described in the VCP submission. The
described in lines 8(a) through 8(f)).
nonamender failures (based on 50% of
Under these circumstances, you should
initial fee for the first 20 employers is
the $1,000 general compliance fee)).
simply check the appropriate box on line
$10,000 and must be attached to Form
Note. The compliance fee due on some
7 and not check any of the boxes for
8951. An additional fee equal to the
VCP submissions may ultimately be
reduced compliance fee amounts on line
product of the number of plans in excess
higher than the amounts previously
of 20 multiplied by $250 will also apply.
8. The reduced compliance fee amounts
mentioned on this form. Additional
and eligibility rules are as follows:
The IRS will request the additional fee, if
compliance fees may be due if the VCP
applicable. The maximum compliance
• Line 8(a). The VCP submission relates
submission involves:
fee for a group submission is $50,000
to certain failures involving the late
(a) Egregious qualification failures;
(see section 12.05).
adoption of good faith amendments,
(b) SEP, SARSEP or SIMPLE IRA
interim amendments or amendments
plans that choose to allow excess
required to implement optional tax law
amounts to remain within the affected
changes, as described in section 6.05(3)
IRAs;
(a). The compliance fee is reduced to
$375 (see section 12.03(2)).
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