Form 8951 - Compliance Fee For Application For Voluntary Correction Program (Vcp) Page 4
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Form 8951 (Rev. 9-2015)
Page
• Line 8(g). The compliance fee for a
If you are using this special
Under these circumstances, you should
simply check the appropriate box on line
SEP, SARSEP, or a SIMPLE IRA VCP
methodology to determine the general
compliance fee, do not complete line 7,
7 and not check any of the boxes for
submission is generally $250 (see
instead attach a written explanation that
reduced compliance fee amounts on line
section 12.06).
details how the compliance fee was
8. The reduced compliance fee amounts
• Line 8(h). If the VCP submission is a
determined and how the submission
and eligibility rules are as follows:
group submission from an eligible
satisfies the conditions in section 10.12.
organization as defined in section
• Line 8(a). The VCP submission relates
When completing Form 8951, the plan
to certain failures involving the late
10.11(2), the general compliance fee is
administrator would complete line 5 in
adoption of good faith amendments,
not applicable. The compliance fee for a
the normal manner by using the total
interim amendments or amendments
group submission is based on the
participant count reported on the most
required to implement optional tax law
number of plans affected by the failure
recently filed Form 5500 series return for
described in the VCP submission. The
changes, as described in section 6.05(3)
the entire plan.
(a). The compliance fee is reduced to
initial fee for the first 20 employers is
Example. Multiple Employer Plan
$375 (see section 12.03(2)).
$10,000 and must be attached to Form
TTDY has 3 participating companies.
8951. An additional fee equal to the
• Line 8(b). The VCP submission is
The most recently filed Form 5500
product of the number of plans in excess
limited to late non-amender failures
of 20 multiplied by $250 will also apply.
shows the plan has 5,335 participants.
described in section 6.05 and the VCP
The IRS will request the additional fee, if
Plan participants are divided among the
submission is made within a 1-year
applicable. The maximum compliance
companies in the following manner:
period following the expiration of the
fee for a group submission is $50,000
plan's remedial amendment period for
Corporation A has 125 participants
(see section 12.05).
Corporation B has 10 participants
complying with such changes. The
Corporation C has 5,200 participants
general compliance fee is reduced by
• Line 8(i). Section 12.02(4) gives the IRS
50%. See Section 12.03(1).
discretionary authority to waive the
Assume Corporations A and B
compliance fee in the case of a
incorrectly excluded eligible employees
• Line 8(c). The VCP submission relates
terminating orphan plan, if requested.
from the plan by not providing the proper
to a failure to comply with Internal
See section 5.03(1) for a definition of an
Revenue Code (IRC) section 401(a)(9)
information to the plan administrator due
orphan plan. A VCP applicant who is an
to flaws in their respective HR and
minimum distribution rules affecting 300
eligible party as defined in section
payroll processes. Corporation C
or fewer plan participants. The
5.03(2) can request that the compliance
properly included all eligible employees
compliance fee is reduced to: (i) $500 if
fee be waived. Include a written
and had no failures. A VCP submission
150 or fewer participants are affected, or
explanation that explains why a waiver
(ii) $1,500 if 151 to 300 participants are
will be submitted to the Service to
should be granted (see section
affected (see section 12.02(2) as
resolve these operational failures. The
11.03(13)).
general compliance fee for a VCP
modified by Rev. Proc. 2015-27, section
Step 4: If a VCP submission consists
submission would normally be $20,000
4.12).
of failures limited to lines 8(a) through
given the participant count reported on
• Line 8(d). The VCP submission relates
8(e) and if lines 8(f) through 8(i) are not
the Plan's latest filed Form 5500.
to a failure of participant loans to comply
applicable, then the compliance fee
However, the plan administrator for
with IRC section 72(p)(2) rules affecting
Multiple Employer Plan TTDY chooses to
amount will be the lesser of: the sum of
no more than 25% of plan participants in
calculate the general compliance fee
the reduced compliance fee amounts or
any of the years in which the failure
separately for each affected employer
the general compliance fee amount. See
occurred. The compliance fee is based
section 12.04. If the general compliance
based on the participants attributable to
on the number of participants with loans
fee amount is lower, simply check the
that employer because the plan
that do not comply with IRC section
administrator believes the filing satisfies
appropriate box on line 7 and do not
72(p) (see section 12.02(3) as modified
the conditions discussed in section
check any of the boxes on line 8. If the
by Rev. Proc. 2015-27, section 4.13 for
10.12. The general compliance fee in this
total of the applicable reduced fee
the compliance fee).
amounts is less than the general
situation is determined in the following
• Line 8(e). The VCP submission relates
compliance fee amount, check the
manner:
to a failure to timely adopt an
applicable boxes on line 8 and include a
Corporation A has 125 participants, so
amendment (upon which a favorable
worksheet showing how you determined
the general compliance fee calculated
determination letter is conditioned)
the compliance fee amount for your
for this employer is $5,000.
within the applicable remedial
submission.
Corporation B has 10 participants, so
amendment period, provided the
Example 1. Plan sponsor of XYZ
the general compliance fee calculated
required amendment is adopted within 3
401(k) Plan requests a compliance
for this employer is $750.
months of the expiration of the remedial
statement to correct (i) 401(a)(9)
amendment period for adopting the
Adding these two amounts together, the
minimum distribution failures (affecting
amendment. The compliance fee is
total general compliance fee for this
150 or fewer participants), (ii) late
reduced to $500 (see section 12.03(3)).
submission is $5,750.
adoption of interim amendments, and (iii)
• Line 8(f). The VCP submission is limited
Step 3: If any of the reduced
nonamender failures (submitted within
to a request for a minor modification of a
compliance fee amounts are appropriate
one year after the remedial amendment
previously issued compliance statement
for your VCP submission, check the
period has expired). The sponsor reports
and the request is mailed to the IRS
applicable boxes on line 8. However, if
300 plan participants on Line 5. The
before the end of the correction period
(1) you cannot mark any of the boxes in
required compliance fee is $3,375,
provided for in the compliance
lines 8(g) through 8(i) for your
calculated as follows: (i) $500 (for 401(a)
statement. The compliance fee for the
submission, and (2) your submission
(9) failures), plus (ii) $375 (for interim
request is the lesser of: 50% of the
involves one or more failures that are not
amendment failures), plus (iii) $2,500 (for
original compliance fee or $1,500 (see
described in lines 8(a) through 8(f), then
nonamender failures (based on 50% of
section 10.07(10)).
you are not eligible for a reduced
the general $5,000 compliance fee for
compliance fee amount (even if your
plans with 101 to 500 participants)).
submission includes one or more failures
described in lines 8(a) through 8(f)).
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