SECTION 8. FEES FOR TVC

.01 TVC compliance correction fee. The applicable TVC compliance correction fee depends on the type of failure and, generally, the number of employees of the employer.

.02 Fee for Operational Failures. Subject to section 8.05 below, the compliance correction fees for Operational Failures are as follows:

(1) The fee for an employer with fewer than 25 employees is $500.

(2) The fee for an employer with at least 25 and no more than 1,000 employees is $1,250.

(3) The fee for an employer with more than 1,000 employees but less than 10,000 is $5,000. (4) The fee for an employer with 10,000 or more employees is $10,000. .03 Fee for certain Excess Amounts. Subject to section 8.05 below, the compliance correction fee for Excess Amounts that are corrected pursuant to section 4.02(2) above is equal to the sum of (1) the applicable fee described in section 8.02 above and (2) two percent of the Excess Amounts, adjusted for earnings through the date of the TVC application,

February 1, 1999 54 1999–5 I.R.B.

contributed or allocated in the calendar year of the TVC application and in the three calendar years prior thereto. For purposes of determining the fee described in this section 8.03, where there is a failure to satisfy both the § 403(b)(2) and § 415 limits with respect to a single employee for a year, the fee will take into account only the greater Excess Amount.

.04 Fee for Demographic and Eligibil-

ity Failures. (1) Subject to section 8.05 below, the compliance correction fee for a 403(b) Plan with failures that include Demographic or Eligibility Failures is determined in accordance with the table set forth below. It is expected that in most instances the compliance correction fee imposed will be at or near the presumptive amount in each range; however, the fee may be a higher or lower amount within

the range, depending on the factors in paragraph (2) below. This table is the same as the table provided in Section 13.05 of Rev. Proc. 98–22, except that (a) the reference to the “VCR fee” is changed to refer to the TVC compliance correction fee for Operational Failures set forth in section 8.02 above, and (b) the fee is determined with reference to the number of employees rather than participants.

FEES FOR DEMOGRAPHIC AND ELIGIBILITY FAILURES

(2) Consideration of whether the compliance correction fee for a 403(b) Plan with failures that include Demographic or Eligibility Failures should be equal to, greater than, or less than the presumptive amount set forth in section 8.04(1) above will depend on factors relating to the nature, extent, and severity of the failure.

These factors include: (a) whether the failure is a failure to satisfy the requirements of § 401(a)(4), § 401(a)(26), or § 410(b) (pursuant to § 403(b)(12)(A)(i)); (b) whether the plan is a Plan of an Ineligible Employer; (c) whether the 403(b) Plan has a combination of Operational, Demographic, and Eligibility failures;

and (d) the period of time over which the failure occurred.

.05 Fee for multiple failures. If correction is requested for multiple failures, the compliance correction fee will be determined in accordance with the table set forth below.

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.06 Fee for egregious failures. Consistent with section 13.05(3) of Rev. Proc. 98–22, in cases involving failures that are egregious, the maximum compliance correction fee applicable to the plan is increased to 40 percent of the Total Sanction Amount and no presumptive amount applies.