Form 8951 - Compliance Fee For Application For Voluntary Correction Program (Vcp) Page 4
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Form 8951 (Rev. 1-2013)
Page
Example. Multiple Employer Plan
• Line 8(h). The compliance fee for a
interim amendments or amendments
required to implement optional tax law
SEP, SARSEP, or a SIMPLE IRA VCP
TTDY has 3 participating companies.
The most recently filed Form 5500
changes, as described in section 6.05(3)
submission is generally $250 (see
shows the plan has 5,335 participants.
(a). The compliance fee is reduced to
section 12.06).
Plan participants are divided among the
$375 (see section 12.03(2)).
• Line 8(i). If the VCP submission is a
companies in the following manner:
• Line 8(b). The VCP submission is
group submission from an eligible
organization as defined in section
Corporation A has 125 participants
limited to late non-amender failures
described in section 6.05 and the VCP
10.11(2), the general compliance fee is
Corporation B has 10 participants
submission is made within a 1-year
not applicable. The compliance fee for a
Corporation C has 5,200 participants
period following the expiration of the
group submission is based on the
Assume Corporations A and B
plan's remedial amendment period for
number of plans affected by the failure
incorrectly excluded eligible employees
described in the VCP submission. The
complying with such changes. The
from the plan by not providing the proper
general compliance fee is reduced by
initial fee for the first 20 employers is
information to the plan administrator due
50%. See Section 12.03(1).
$10,000 and must be attached to Form
to flaws in their respective HR and
8951. An additional fee equal to the
• Line 8(c). The VCP submission relates
payroll processes. Corporation C
product of the number of plans in excess
properly included all eligible employees
to a failure to comply with Internal
of 20 multiplied by $250 will also apply.
and had no failures. A VCP submission
Revenue Code (IRC) section 401(a)(9)
The IRS will request the additional fee, if
will be submitted to the Service to
minimum distribution rules affecting 50
applicable. The maximum compliance
resolve these operational failures. The
or fewer plan participants. The
fee for a group submission is $50,000
compliance fee is reduced to $500 (see
general compliance fee for a VCP
(see section 12.05).
submission would normally be $20,000
section 12.02(2)).
given the participant count reported on
• Line 8(j). Section 12.02(4) gives the IRS
• Line 8(d). The VCP submission relates
the Plan's latest filed Form 5500.
discretionary authority to waive the
to a failure of participant loans to comply
compliance fee in the case of a
However, the plan administrator for
with IRC section 72(p)(2) rules affecting
terminating orphan plan, if requested.
Multiple Employer Plan TTDY chooses to
no more than 25% of plan participants in
calculate the general compliance fee
See section 5.03 for a definition of an
any of the years in which the failure
separately for each affected employer
orphan plan. A VCP applicant who is an
occurred. The general compliance fee is
based on the participants attributable to
eligible party as defined in section 5.03
reduced by 50% (see section 12.02(3)).
can request that the compliance fee be
that employer because the plan
• Line 8(e). The VCP submission relates
waived. Include a written explanation
administrator believes the filing satisfies
to a failure to timely adopt an
that explains why a waiver should be
the conditions discussed in section
amendment (upon which a favorable
10.12. The general compliance fee in this
granted (see section 11.03(13)).
determination letter is conditioned)
situation is determined in the following
Step 4: If a VCP submission consists
within the applicable remedial
manner:
of failures limited to lines 8(a) through 8(f)
amendment period, provided the
and if lines 8(g) through 8(j) are not
Corporation A has 125 participants, so
required amendment is adopted within 3
applicable, then the compliance fee
the general compliance fee calculated
months of the expiration of the remedial
amount will be the lesser of: the sum of
for this employer is $5,000.
amendment period for adopting the
the reduced compliance fee amounts or
amendment. The compliance fee is
Corporation B has 10 participants, so
the general compliance fee amount. See
the general compliance fee calculated
reduced to $500 (see section 12.03(3)).
section 12.04. If the general compliance
for this employer is $750.
• Line 8(f). For 403(b) plans, the general
fee amount is lower, simply check the
Adding these two amounts together, the
VCP compliance fee is reduced by 50%
appropriate box on line 7 and do not
total general compliance fee for this
if the VCP submission meets the
check any of the boxes on line 8. If the
submission is $5,750.
following conditions:
total of the applicable reduced fee
Step 3: If any of the reduced
(a) It's solely limited to a single failure
amounts is less than the general
involving a failure to timely adopt a
compliance fee amounts are appropriate
compliance fee amount, check the
for your VCP submission, check the
written 403(b) plan document;
applicable boxes on line 8 and include a
applicable boxes on line 8. However, if
(b) The VCP submission has been
worksheet showing how you determined
(1) you cannot mark any of the boxes in
made within the 1-year period
the compliance fee amount for your
lines 8(h) through 8(j) for your
beginning with the date of publication
submission.
of Rev. Proc. 2013-12; and
submission, and (2) your submission
Example 1: Plan sponsor of XYZ
(c) The VCP submission must be
involves one or more failures that are not
401(k) Plan requests a compliance
described in lines 8(a) through 8(g), then
submitted no later than December 31,
statement to correct (i) 401(a)(9)
you are not eligible for a reduced
2013 (see section 12.02(5)).
minimum distribution failures (affecting
compliance fee amount (even if your
• Line 8(g). The VCP submission is
no more than 50 participants), (ii) late
submission includes one or more failures
limited to a request for a minor
adoption of interim amendments, and (iii)
described in lines 8(a) through 8(g)).
modification of a previously issued
nonamender failures (submitted within
Under these circumstances, you should
compliance statement and the request is
one year after the remedial amendment
simply check the appropriate box on line
mailed to the IRS before the end of the
period has expired). The sponsor reports
7 and not check any of the boxes for
correction period provided for in the
300 plan participants on Line 5. The
reduced compliance fee amounts on line
compliance statement. The compliance
required compliance fee is $3,375,
8. The reduced compliance fee amounts
fee for the request is the lesser of: 50%
calculated as follows: (i) $500 (for 401(a)
and eligibility rules are as follows:
of the original compliance fee or $1,500
(9) failures), plus (ii) $375 (for interim
• Line 8(a). The VCP submission relates
(see section 10.07(10)).
amendment failures), plus (iii) $2500 (for
to certain failures involving the late
nonamender failures (based on 50% of
adoption of good faith amendments,
the general $5,000 compliance fee for
plans with 101 to 500 participants)).
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