SECTION 3. EARNINGS

ADJUSTMENT METHODS AND EXAMPLES

.01 Earnings Adjustment Methods. (1) In general. (a) Under section 6.02(4)(a) of this revenue procedure, whenever the appropriate correction method for an Operational Failure in a defined contribution plan includes a corrective contribution or allocation that increases one or more employees’ account balances (now or in the future), the contribution or allocation is adjusted for earnings and forfeitures. This section 3 provides earnings adjustment methods (but not forfeiture adjustment methods) that may be used by an employer to adjust a corrective contribution or allocation for earnings in a defined contribution plan. Consequently, these earnings adjustment methods may be used to determine the earnings adjustments for corrective contributions or allocations made under the correction methods in section 2 and under the correction methods in Appendix A. If an earnings adjustment method in this section 3 is used to adjust a corrective contribution or allocation, that adjustment is treated as satisfying the earnings adjustment requirement of section 6.02(4)(a) of this revenue procedure. Other earnings ad

justment methods, different from those illustrated in this section 3, may also be appropriate for adjusting corrective contributions or allocations to reflect earnings.

(b) Under the earnings adjustment methods of this section 3, a corrective contribution or allocation that increases an employee’s account balance is adjusted to reflect an “earnings amount” that is based on the earnings rate(s) (determined under section 3.01(3)) for the period of the failure (determined under section 3.01(2)). The earnings amount is allocated in accordance with section 3.01(4).

(c) The rule in section 6.02(5)(a) of this revenue procedure permitting reasonable estimates in certain circumstances applies for purposes of this section 3. For this purpose, a determination of earnings made in accordance with the rules of administrative convenience set forth in this section 3 is treated as a precise determination of earnings. Thus, if the probable difference between an approximate determination of earnings and a determination of earnings under this section 3 is insignificant and the administrative cost of a precise determination would significantly exceed the probable difference, reasonable estimates may be used in calculating the appropriate earnings.

(d) This section 3 does not apply to corrective distributions or corrective reductions in account balances. Thus, for example, while this section 3 applies in increasing the account balance of an improperly excluded employee to correct the exclusion of the employee under the reallocation correction method described in section 2.02(2)(a)(iii)(B), this section 3 does not apply in reducing the account balances of other employees under the reallocation correction method. (See section 2.02(2) (a)(iii)(C) for rules that apply to the earnings adjustments for such reductions.) In addition, this section 3 does not apply in determining earnings adjustments under the one-to-one correction method described in section 2.01(1)(b)(iii).

(2) Period of the Failure. (a) General Rule. For purposes of this section 3, the “period of the failure” is the period from the date that the failure began through the date of correction. For example, in the case of an improper forfeiture of an employee’s account balance, the beginning of the

2003–25 I.R.B. 1082 June 23, 2003

dance with section 3.01(4)(b). The earnings for the subsequent full valuation periods ending before the beginning of the valuation period during which the corrective contribution or allocation is made are allocated solely to the employee for whom the required contribution should have been made. The earnings amount for the valuation period during which the corrective contribution or allocation is made (“second partial valuation period”) is allocated in accordance with the plan’s method for allocating other earnings for that valuation period in accordance with section 3.01(4)(b). (See Example 26.) .02 Examples.

Example 23 :

Employer L maintains a profit-sharing plan that provides only for nonelective contributions. The plan has a single investment fund. Under the plan, assets are valued annually (the last day of the plan year) and earnings for the year are allocated in proportion to account balances as of the last day of the prior year, after reduction for distributions during the current year but without regard to contributions received during the current year (the “prior year account balance”). Plan contributions for 1997 were made on March 31, 1998. On April 20, 2000, Employer L determines that an operational failure occurred for 1997 because Employee X was improperly excluded from the plan. Employer L decides to correct the failure by using the Appendix A correction method for the exclusion of an eligible employee from nonelective contributions in a profit-sharing plan. Under this method, Employer L determines that this failure is corrected by making a contribution on behalf of Employee X of $5,000 (adjusted for earnings). The earnings rate under the plan for 1998 was +20%. The earnings rate under the plan for 1999 was +10%. On May 15, 2000, when Employer L determines that a contribution to correct for the failure will be made on June 1, 2000, a reasonable estimate of the earnings rate under the plan from January 1, 2000, to June 1, 2000 is +12%.

Earnings Adjustment on the Corrective Contribution :

The $5,000 corrective contribution on behalf of Employee X is adjusted to reflect an earnings amount based on the earnings rates for the period of the failure (March 31, 1998, through June 1, 2000) and the earnings amount is allocated using the plan allocation method. Employer L determines that a pro rata simplifying assumption may be used to determine the earnings rate for the period from March 31, 1998, to December 31, 1998, because that rate does not significantly understate or overstate the actual earnings for that period. Accordingly, Employer L determines that the earnings rate for that period is 15% (9/12 of the plan’s 20% earnings rate for the year). Thus, applicable earnings rates under the plan during the period of the failure are:

are nonhighly compensated employees, the rate of return of the fund with the highest earnings rate under the plan for the period of the failure may be used to determine the earnings rate for all corrective contributions or allocations. If the employee had not made any applicable investment choices, the earnings rate may be based on the earnings rate under the plan as a whole ( i.e., the average of the rates earned by all of the funds in the valuation periods during the period of the failure weighted by the portion of the plan assets invested in the various funds during the period of the failure).

(c) Other Simplifying Assumptions. For administrative convenience, the earnings rate applicable to the corrective contribution or allocation for a valuation period with respect to any investment fund may be assumed to be the actual earnings rate for the plan’s investments in that fund during that valuation period. For example, the earnings rate may be determined without regard to any special investment provisions that vary according to the size of the fund. Further, the earnings rate applicable to the corrective contribution or allocation for a portion of a valuation period may be a pro rata portion of the earnings rate for the entire valuation period, unless the application of this rule would result in either a significant understatement or overstatement of the actual earnings during that portion of the valuation period.

(4) Allocation Methods. (a) In General. For purposes of this section 3, the earnings amount generally may be allocated in accordance with any of the methods set forth in this paragraph (4). The methods under paragraph (4)(c), (d), and (e) are intended to be particularly helpful where corrective contributions are made at dates between the plan’s valuation dates.

(b) Plan Allocation Method. Under the plan allocation method, the earnings amount is allocated to account balances under the plan in accordance with the plan’s method for allocating earnings as if the failure had not occurred. (See Example 23.)

(c) Specific Employee Allocation Method. Under the specific employee allocation method, the entire earnings amount is allocated solely to the account balance of the employee on whose behalf the corrective contribution or allocation is made

(regardless of whether the plan’s allocation method would have allocated the earnings solely to that employee). In determining the allocation of plan earnings for the valuation period during which the corrective contribution or allocation is made, the corrective contribution or allocation (including the earnings amount) is treated in the same manner as any other contribution under the plan on behalf of the employee during that valuation period. Alternatively, where the plan’s allocation method does not allocate plan earnings for a valuation period to a contribution made during that valuation period, plan earnings for the valuation period during which the corrective contribution or allocation is made may be allocated as if that employee’s account balance had been increased as of the last day of the prior valuation period by the corrective contribution or allocation, including only that portion of the earnings amount attributable to earnings through the last day of the prior valuation period. The employee’s account balance is then further increased as of the last day of the valuation period during which the corrective contribution or allocation is made by that portion of the earnings amount attributable to earnings after the last day of the prior valuation period. (See Example 24.)

(d) Bifurcated Allocation Method. Under the bifurcated allocation method, the entire earnings amount for the valuation periods ending before the date the corrective contribution or allocation is made is allocated solely to the account balance of the employee on whose behalf the corrective contribution or allocation is made. The earnings amount for the valuation period during which the corrective contribution or allocation is made is allocated in accordance with the plan’s method for allocating other earnings for that valuation period in accordance with section 3.01(4)(b). (See Example 25.)

(e) Current Period Allocation Method. Under the current period allocation method, the portion of the earnings amount attributable to the valuation period during which the period of the failure begins (“first partial valuation period”) is allocated in the same manner as earnings for the valuation period during which the corrective contribution or allocation is made in accor

June 23, 2003 1083 2003–25 I.R.B.

Time Periods Earnings Rate

3/31/98 - 12/31/98 (First Partial Valuation Period) + 15%

1/1/99 - 12/31/99 + 10%

1/1/00 - 6/1/00 (Second Partial Valuation Period) + 12%

If the $5,000 corrective contribution had been contributed for Employee X on March 31, 1998, (1) earnings for 1998 would have been increased by the amount of the earnings on the additional $5,000 contribution from March 31, 1998, through December 31, 1998, and would have been allocated as 1998 earnings in proportion to the prior year (December 31, 1997) account balances, (2) Employee X’s account balance as of December 31, 1998, would have been increased by the additional $5,000 contribution, (3) earnings for 1999 would have been increased by the 1999 earnings on the additional $5,000 contribution (including 1998 earnings thereon) allocated in proportion to the prior year (December 31, 1998) account balances along with other 1999 earnings, and (4) earnings for 2000 would have been increased by the earnings on the additional $5,000 (including 1998 and 1999 earnings thereon) from January 1 to June 1, 2000, and would be allocated in proportion to the prior year (De

cember 31, 1999) account balances along with other 2000 earnings. Accordingly, the $5,000 corrective contribution is adjusted to reflect an earnings amount of $2,084 ($5,000[(1.15)(1.10)(1.12)-1]) and the earnings amount is allocated to the account balances under the plan allocation method as follows:

(a) Each account balance that shared in the allocation of earnings for 1998 is increased, as of December 31, 1998, by its appropriate share of the earnings amount for 1998, $750 ($5,000(.15)).

(b) Employee X’s account balance is increased, as of December 31, 1998, by $5,000.

(c) The resulting December 31, 1998, account balances will share in the 1999 earnings, including the $575 for 1999 earnings included in the corrective contribution ($5,750(.10)), to determine the account balances as of December 31, 1999. However, each account balance other than Employee X’s account balance has already shared in the 1999 earnings, ex

TABLE 1 CALCULATION AND ALLOCATION OF THE CORRECTIVE AMOUNT ADJUSTED FOR EARNINGS

cluding the $575. Accordingly, Employee X’s account balance as of December 31, 1999, will include $500 of the 1999 portion of the earnings amount based on the $5,000 corrective contribution allocated to Employee X’s account balance as of December 31, 1998 ($5,000(.10)). Then each account balance that originally shared in the allocation of earnings for 1999 ( i.e., excluding the $5,500 additions to Employee X’s account balance) is increased by its appropriate share of the remaining 1999 portion of the earnings amount, $75.

(d) The resulting December 31, 1999, account balances (including the $5,500 additions to Employee X’s account balance) will share in the 2000 portion of the earnings amount based on the estimated January 1, 2000, to June 1, 2000, earnings included in the corrective contribution equal to $759 ($6,325(.12)). (See Table 1.)

Earnings Rate Amount Allocated to:

Corrective Contribution $5,000 Employee X First Partial Valuation Period Earnings 15% 750 ¹ All 12/31/1997 Account Balances ⁴

1999 Earnings 10% 575 ² Employee X ($500)/All 12/31/1998 Account Balances ($75) ⁴

Second Partial Valuation Period Earnings

12% 759 ³ All 12/31/1999 Account Balances (including Employee X’s $5,500) ⁴

Total Amount Contributed $7,084

1$5,000 x 15% 2$5,750($5,000 + 750) x 10% 3$6,325($5,000 + 750 + 575) x 12% 4After reduction for distributions during the year for which earning are being determined but without regard to contributions received during the year for which earnings are being determined.

Example 24 :

The facts are the same as in Example 23.

Earnings Adjustment on the Corrective Contribution :

The earnings amount on the corrective contribution is the same as in Example 23, but the earnings amount is allocated using the specific employee al

location method. Thus, the entire earnings amount for all periods through June 1, 2000 ( i.e., $750 for March 31, 1998, to December 31, 1998, $575 for 1999, and $759 for January 1, 2000, to June 1, 2000) is allocated to Employee X. Accordingly, Employer L makes a contribution on June 1, 2000, to the plan of $7,084 ($5,000(1.15)(1.10)(1.12)). Employee X’s account bal

ance as of December 31, 2000, is increased by $7,084. Alternatively, Employee X’s account balance as of December 31, 1999, is increased by $6,325 ($5,000(1.15)(1.10)), which shares in the allocation of earnings for 2000, and Employee X’s account balance as of December 31, 2000, is increased by the remaining $759. (See Table 2.)

2003–25 I.R.B. 1084 June 23, 2003

TABLE 2 CALCULATION AND ALLOCATION OF THE CORRECTIVE AMOUNT ADJUSTED FOR EARNINGS

Earnings Rate Amount Allocated to:

Corrective Contribution $5,000 Employee X First Partial Valuation Period Earnings 15% 750 ¹ Employee X 1999 Earnings 10% 575 ² Employee X Second Partial Valuation Period 12% 759 ³ Employee X Earnings

Total Amount Contributed $7,084

1$5,000 x 15% 2$5,750($5,000 + 750) x 10% 3$6,325($5,000 + 750 + 575) x 12%

Example 25 :

The facts are the same as in Example 23.

Earnings Adjustment on the Corrective Contribution :

The earnings amount on the corrective contribution is the same as in Example 23, but the earnings amount is allocated using the bifurcated allocation

method. Thus, the earnings for the first partial valuation period (March 31, 1998 to December 31, 1998) and the earnings for 1999 are allocated to Employee X. Accordingly, Employer L makes a contribution on June 1, 2000, to the plan of $7,084 ($5,000(1.15) (1.10)(1.12)). Employee X’s account balance as of December 31, 1999, is increased by $6,325 ($5,000

TABLE 3 CLACULATION AND ALLOCATION OF THE CORRECTIVE AMOUNT ADJUSTED FOR EARNINGS

(1.15)(1.10)); and the December 31, 1999, account balances of employees (including Employee X’s increased account balance) will share in estimated January 1, 2000, to June 1, 2000, earnings on the corrective contribution equal to $759 ($6,325(.12)). (See Table 3.)

Earnings Rate Amount Allocated to:

Corrective Contribution $5,000 Employee X First Partial Valuation Period Earnings 15% 750 ¹ Employee X 1999 Earnings 10% 575 ² Employee X Second Partial Valuation Period 12% 759 ³ 12/31/99 Account Balances (including Earnings Employee X’s $6,325) ⁴

Total Amount Contributed $7,084

1$5,000 x 15% 2$5,750($5,000 + 750) x 10% 3$6,325($5,000 + 750 + 575) x 12% 4After reduction for distributions during the 2000 year but without regard to contributions received during the 2000 year.

Example 26 :

The facts are the same as in Example 23.

Earnings Adjustment on the Corrective Contribution :

The earnings amount on the corrective contribution is the same as in Example 23, but the earnings amount is allocated using the current period allocation method. Thus, the earnings for the first partial valuation period (March 31, 1998, to December 31, 1998) are allocated as 2000 earnings. Accordingly, Em

ployer L makes a contribution on June 1, 2000, to the plan of $7,084 ($5,000 (1.15)(1.10)(1.12)). Employee X’s account balance as of December 31, 1999, is increased by the sum of $5,500 ($5,000(1.10)) and the remaining 1999 earnings on the corrective contribution equal to $75 ($5,000(.15)(.10)). Further, both (1) the estimated March 31, 1998, to December 31, 1998, earnings on the corrective contribution equal to $750 ($5,000(.15)) and (2) the estimated January 1, 2000, to June 1, 2000, earnings on the corrective contribu

tion equal to $759 ($6,325(.12)) are treated in the same manner as 2000 earnings by allocating these amounts to the December 31, 2000, account balances of employees in proportion to account balances as of December 31, 1999 (including Employee X’s increased account balance). (See Table 4.) Thus, Employee X is allocated the earnings for the full valuation period during the period of the failure.

June 23, 2003 1085 2003–25 I.R.B.

TABLE 4 CALCULATION AND ALLOCATION OF THE CORRECTIVE AMOUNT ADJUSTED FOR EARNINGS

Earnings Rate Amount Allocated to:

Corrective Contribution $5,000 Employee X First Partial Valuation Period Earnings 15% 750 ¹ 12/31/99 Account Balances (including Employee X’s $5,575) ⁴

1999 Earnings 10% 575 ² Employee X Second Partial Valuation Period Earn- 12% 759 ³ 12/31/99 Account Balances (including ings Employee X’s $5,575) ⁴

Total Amount Contributed $7,084

1$5,000 x 15% 2$5,750($5,000 + 750) x 10% 3$6,325($5,000 + 750 + 575) x 12% 4After reduction for distributions during the year for which earnings are determined but without regard to contributions received during the year for which earnings are being determined.

2003–25 I.R.B. 1086 June 23, 2003

APPENDIX C VCP CHECKLIST IS YOUR SUBMISSION COMPLETE? INSTRUCTIONS The Service will be able to respond more quickly to your VCP request if it is carefully prepared and complete. To ensure that your request is in order, use this checklist. Answer each question in the checklist by inserting yes, no, or N/A, as appropriate, in the blank next to the item. Sign and date the checklist (as taxpayer or authorized representative) and place it on top of your re- quest.

You must submit a completed copy of this checklist with your request. If a completed checklist is not submitted with your request, substantive consideration of your submission will be deferred until a completed checklist is received.

TAXPAYER’S NAME TAXPAYER’S I.D. NO. PLAN NAME & NO. ATTORNEY/P.O.A.

The following items relate to all submissions:

1. Have you identified the type of plan or group plans submitted and included a complete description of the failure(s) and the years in which the failure(s) occurred (including the years for which the statutory period has expired)? (See sections 11.02(1) & (2) of Rev. Proc. 2003–44.) (Hereafter, all section references are to Rev. Proc. 2003–44.)
2. Have you included an explanation of how and why the failure(s) arose, including a description of the administrative procedures for the plan in effect at the time the failure(s) occurred? (See section 11.02(3) and (4).)
3. Have you included a detailed description of the method for correcting the failure(s) identified in your submission? This description must include, for example, the number of employees affected and the expected cost of correction (both of which may be approximated if the exact number cannot be determined at the time of the request), the years involved, and calculations or assumptions the Plan Sponsor used to determine the amounts needed for correction. In lieu of providing correction calculations with respect to each employee affected by a failure, you may submit calculations with respect to a representative sample of affected employees. However, the representative sample calculations must be sufficient to demonstrate each aspect of the correction method proposed. Note that each step of the correction method must be described in narrative form. (See section 11.02(5).)
4. Have you described the earnings or interest methodology (indicating computation period and basis for determining earnings or interest rates) that will be used to calculate earnings or interest on any corrective contributions or distributions? (As a general rule, the interest rate (or rates) earned by the plan during the applicable period(s) should be used in determining the earnings for corrective contributions or distributions.) (See section 11.02(6).)
5. Have you submitted specific calculations for either affected employees or a representative sample of affected employees? (See section 11.02(7).)
6. Have you described the method that will be used to locate and notify former employees or, if there are no former employees affected by the failure(s) or the correction(s), provided an affirmative statement to that effect? (See section 11.02(8).)
7. Have you provided a description of the administrative measures that have been or will be implemented to ensure that the same failure(s) do not recur? (See section 11.02(9).)
8. Have you included a statement that, to the best of the Plan Sponsor’s knowledge, the plan is not currently under an Employee Plans examination? (See section 11.02(10).)
9. Have you included a statement that, to the best of the Plan Sponsor’s knowledge, the Plan Sponsor is not under an Exempt Organizations examination? (See section 11.02(10).)
10. If the submission includes a failure related to Transferred Assets, have you included a description of the related employer transaction, including the date of the employer transaction and the date the assets were transferred to the plan? (See section 11.02(11).)
11. Have you included a copy of the portions of the plan document (and adoption agreement, if applicable) relevant to the failure(s) and method(s) of correction? (See section 11.03(2).)

June 23, 2003 1087 2003–25 I.R.B.

12. Have you included the appropriate voluntary compliance fee due with the submission? (See section 11.04.)

13. Have you included the original signature of the sponsor or the sponsor’s authorized representative? (See section 11.06.)

14. Have you included a Power of Attorney (Form 2848)? Note: representation under VCP is limited to attorneys, certified public accountants, enrolled agents, and enrolled actuaries; unenrolled return preparers are not eligible to act as representatives under VCP. (See section 11.07.)

15. Have you included a Penalty of Perjury Statement signed (original signature only) and dated by the Plan Sponsor? (See section 11.08.)

16. Have you designated your submission for a Qualified Plan, 403(b) Plan, SEP or SIMPLE IRA Plan, and as a Group Submission, an Anonymous Submission or nonamender submission, if applicable? (See section 11.10.)

17. If you are requesting a waiver of the excise tax under § 4974 of the Code, have you included the request, and, if applicable, an explanation supporting the request for any affected owner-employee or 10 percent owner? (See section 6.09(3).)

18. Have you submitted an application for a determination letter? (See section 10.06.)

19. If the plan is currently being considered in an unrelated determination letter application, have you included a statement to that effect? (See section 11.02(12).)

20. Have you included a copy of the first three pages of the Form 5500 (which includes employee census information) of the most recently filed Form 5500 series return? Note: If a Form 5500 is not applicable, insert N/A and furnish the name of the plan, and the census information required of Form 5500 series filers. (See section 11.03(1).)

21. Have you included a check for the compliance fee made payable to the U.S. Treasury? (See sections 12.01)

If you inserted “N/A” for any item enter explanation:

Signature Date

Title or Authority

Typed or printed name of person signing checklist

2003–25 I.R.B. 1088 June 23, 2003

APPENDIX D SAMPLE FORMATS FOR VCP SUBMISSIONS I. SAMPLE FORMAT FOR VCP SUBMISSION FOR QUALIFIED PLAN

Plan Type, Group or Anonymous Submission

Identification of Failures

A complete description of the failures and the years in which the failures occurred, including (but not limited to):

1. Years in which the failure(s) occurred (including closed years)
2. Number of participants affected (may be estimated)
3. A description of the administrative procedures in effect at the time the failures occurred
4. Explanation of how and why the failures occurred

Description of Proposed Method of Correction

A narrative description of each step of the correction method, including (but not limited to):

1. the number of employees affected (may be estimated)
2. the expected cost of correction (may be estimated)
3. the years involved
4. calculations or assumptions used to determine the amounts needed for correction
5. a description of the methodology that will be used to calculate earnings or actuarial adjustments on any corrective contributions or distributions (indicating the computation periods and the basis for determining earnings or actuarial adjustments in accordance with section 6.02(4) of Rev. Proc. 2003–44)
6. Specific calculations, sufficient to demonstrate each aspect of the correction method proposed, for each affected employee or a representative sample of affected employees
7. The method that will be used to locate and notify former employees and beneficiaries, or an affirmative statement that no former employees or beneficiaries were affected by the failures or will be affected by the correction
8. If a submission includes a failure that refers to Transferred Assets and the failure occurred prior to the transfer, a description of the transaction (including the dates of the employer change and the plan transfer)

Description of Administrative Procedures

A description of the administrative measures that have been or will be implemented to ensure that the failure(s) will not recur.

Statement regarding status of examination : To the best of the Plan Sponsor’s knowledge (1) the subject Plan is not currently under examination of either an Employee Plans Form 5500 series return or other Employee Plans examination, (2) the Plan Sponsor is not under an Exempt Organizations examination (that is, an examination of a Form 990 series return or other Exempt Organizations examination, and (3) neither the Employer nor any of its representatives have received verbal or written notification from the TEGE Division of an impending examination or of any impending referral for such examination, nor is the Plan in Appeals or litigation for any issues raised in such an examination.

Statement (if applicable) regarding status of any determination letter application not related to the VCP submission

Example: The Plan Sponsor applied for and has currently pending an application for a favorable determination letter with the Service filed on (insert date) .

Sample Penalty of Perjury : Under penalties of perjury, I declare that I have examined this submission, including accompanying documents and, to the best of my knowledge and belief, the facts and information presented in support of this submission are true, correct and complete.

Name and Title (Executed by Plan Sponsor)

Required Documentation :

Copy of plan document (or relevant plan provisions, i.e., those provisions relating to the failure(s) described in the submission.)

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Copy of the first three pages of the most recently filed Form 5500 series return. (In the case of a terminated plan, the Form 5500 must be the one filed for the plan year prior to the plan year for which the Final Form 5500 return was filed.) Power of Attorney (Form 2848), if applicable

Determination letter application

Where correction of a Qualification Failure includes correction of a Plan Document Failure or Demographic Failure, or an Operational Failure by plan amendment, as permitted under section 4.05, other than the adoption of an amendment designated by the Service as a model amendment or the adoption of a prototype or volume submitter plan for which the Plan Sponsor has reliance on the plan’s opinion or advisory letter as provided in Rev. Proc. 2003–6, 2003–1 I.R.B. 191, please submit the following documents:

a copy of the amendment

the appropriate application form (i.e., Form 5300 series or Form 6406), and

Form 8717 and the appropriate user fee.

Assembling your submission

Please assemble your submission package in the following order:

1. Checklist - Appendix C
2. Submission signed by the Plan Sponsor or Plan Sponsor’s authorized representative
3. Form 5500
4. Determination application and associated documentation (if applicable)
5. Power of attorney
6. Penalty of perjury statement
7. Plan document

2003–25 I.R.B. 1090 June 23, 2003

II. SAMPLE FORMAT FOR VCP SUBMISSION FOR QUALIFIED PLAN

FAILURE TO AMEND TIMELY FOR TAX LEGISLATION

Plan Type, Group or Anonymous Submission

Identification of Failures

1. Indicate which tax legislation is the subject of the submission: (check all that apply)

CRA

TEFRA/DEFRA/REA

GUST

TEFRA

UCA/OBRA ’93

DEFRA

UCA

REA

OBRA ’93

ERISA

TRA ’86

2. Years in which the failure(s) occurred (including closed years)
3. A description of the administrative procedures in effect at the time the failures occurred
4. Explanation of how and why the failures occurred

Description of Proposed Method of Correction

Include appropriate Determination Letter Application (see “Required Documentation,” below).

Description of Administrative Procedures

A description of the administrative measures that have been or will be implemented to ensure that the failure(s) will not recur

Statement regarding status of examination :

To the best of the Plan Sponsor’s knowledge (1) the subject Plan is not currently under examination of either an Employee Plans Form 5500 series return or other Employee Plans examination, (2) the Plan Sponsor is not under an Exempt Organizations examination (that is, an examination of a Form 990 series return or other Exempt Organizations examination, and (3) neither the Employer nor any of its representatives have received verbal or written notification from the TEGE Division of an impending examination or of any impending referral for such examination, nor is the Plan in Appeals or litigation for any issues raised in such an examination.

Statement (if applicable) regarding status of any determination letter application not related to the VCP submission

Example : The Plan Sponsor applied for and has currently pending an application for a favorable determination letter with the Service filed on (insert date) .

Sample Penalty of Perjury:

Under penalties of perjury, I declare that I have examined this submission, including accompanying documents and, to the best of my knowledge and belief, the facts and information presented in support of this submission are true, correct, and complete.

Name and Title (Executed by Plan Sponsor)

June 23, 2003 1091 2003–25 I.R.B.

Required Documentation:

Appropriate determination letter application form (i.e., Form 5300 series or Form 6406)

Copy of plan document in effect prior to proposed amendment

Copy of the proposed plan amendment

Form 8717 and determination user fee

Copy of determination letter most recently issued with respect to the plan

Any other materials required to be submitted with determination letter application (see Forms 5300, 6406, 5310 & Schedule Q, and 5303)

Copy of the first three pages of the most recently filed Form 5500 series return. (In the case of a terminated plan, include the Form 5500 filed for the plan year prior to the plan year for which the Final Form 5500 return was filed.)

Power of Attorney (Form 2848), if applicable

Assembling your submission

Please assemble your submission package in the following order:

1. Checklist - Appendix C
2. Submission signed by the Plan Sponsor or Plan Sponsor’s authorized representative
3. Form 5500
4. Determination application and associated documentation
5. Power of attorney
6. Penalty of perjury statement
7. Plan document

2003–25 I.R.B. 1092 June 23, 2003