PART V. VOLUNTARY

CORRECTION PROGRAM WITH SERVICE APPROVAL (VCP)

SECTION 10. VCP PROCEDURES .01 VCP requirements . The requirements of this section 10 are satisfied with respect to failures submitted in accordance with the requirements of this section 10 if the Plan Sponsor pays the compliance fee required under section 12 and implements the corrective actions and satisfies any other conditions in the compliance statement described in section 10.08.

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.02 Identification of failures . VCP is not based upon an examination of the plan by the Service. Only the failures raised by the Plan Sponsor or failures identified by the Service in processing the submission are addressed under VCP, and only those failures are covered by a VCP compliance statement. The Service will not make any investigation or finding under VCP concerning whether there are failures.

.03 Effect of VCP submission on examination . Because VCP does not arise out of an examination, consideration under VCP does not preclude or impede (under § 7605(b) or any administrative provisions adopted by the Service) a subsequent examination of the Plan Sponsor or the plan by the Service with respect to the taxable year (or years) involved with respect to matters that are outside the compliance statement. However, a Plan Sponsor’s statements describing failures are made only for purposes of VCP and will not be regarded by the Service as an admission of a failure for purposes of any subsequent examination. See section 5.09 for the definition of Under Examination.

.04 No concurrent examination activity . Except in unusual circumstances, a plan that has been properly submitted under VCP will not be examined while the submission is pending. Notwithstanding the above, a plan that is eligible for a Group Submission under section 10.11 may be examined while the Group Submission is pending with respect to issues not identified in the Group Submission at the time such plan comes Under Examination. In addition, if it is determined that either the plan or the Plan Sponsor was, or may have been, a party to an abusive tax avoidance transaction (as defined under section 4.13(2)), the Service may authorize the examination of the plan, even if a submission pursuant to VCP is pending. This practice regarding concurrent examinations does not extend to other plans of the Plan Sponsor. Thus, any plan of the Plan Sponsor that is not pending under VCP could be subject to examination.

.05 Determination letter application for plan amendments related to a VCP submission . In any case in which a determination letter application is submitted pursuant to section 6.05, the Plan Sponsor must submit concurrently a copy of the amendment or restated plan document, the appropriate determination letter application form ( i.e., Form 5300, 5307, or 5310), and the appropriate user fee to the same address as the VCP submission. If a restated plan document is submitted as evidence of correction, the Plan Sponsor must identify the page, the section, and the specific plan language that resolves each specified Qualification Failure in the VCP submission. Pursuant to section 12.03 of Rev. Proc. 2007–44, in the case of individually designed plans, a restated plan generally will be required. The user fee for the determination letter application and the compliance fee for the VCP submission must be paid by separate checks made payable to the United States Treasury.

.06 Determination letter applications not related to a VCP submission . (1) The Service may process a determination letter application submitted under the determination letter program (including an application requested on Form 5310) concurrently with a VCP submission for the same plan. However, issuance of the determination letter in response to an application made on a Form 5310 will be suspended pending the closure of the VCP submission.

(2) A submission of a plan under the determination letter program does not constitute a submission under VCP. If the Plan Sponsor discovers a failure, the failure may not be corrected as part of the determination letter process. The Plan Sponsor may use SCP and VCP instead, as applicable. If the Service, in connection with a determination letter application, discovers failures, the Service may issue a closing agreement with respect to the failures identified or, if appropriate, refer the case to Employee Plans Examinations. In such a case, the fee structure in section 12 relating to VCP does not apply. Except as provided in section 10.06(3), the sanction in section 14.01 relating to Audit CAP applies. See section 5.08(3) for a description of when a plan submitted for a determination letter is considered to be Under Examination for purposes of EPCRS.

(3) If the Service in connection with a determination letter application discovers the plan has not been amended timely for tax legislation changes, the fee structure in section 14.04 applies.

.07 Processing of submission .

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(1) Screening of submission . Upon receipt of a VCP submission, the Service will review whether the eligibility requirements of section 4 and the submission requirements of section 11 are satisfied, including whether completed Forms 8950 and 8951 have been included with the VCP submission.

(2) Eligibility of submission . If, at any stage of the review process the Service determines that a VCP submission is seriously deficient or that the application of VCP would be inappropriate or impracticable, the Service reserves the right to return the submission without contacting the Plan Sponsor. A VCP submission that does not include a Form 8950 or Form 8951 will be considered to be seriously deficient. If no substantive processing of the case has occurred, the Service will refund the compliance fee submitted with the request.

(3) Review of submission . Once the Service determines that the submission is complete under VCP, the Service will contact the Plan Sponsor or the Plan Sponsor’s representative to discuss the proposed corrections and the plan’s administrative procedures.

(4) Additional information required . If additional information is required, a Service representative will generally contact the Plan Sponsor or the Plan Sponsor’s representative and explain what is needed to complete the submission. The Plan Sponsor will have 21 calendar days from the date of this contact to provide the requested information. If the information is not received within 21 days, the matter will be closed, the compliance fee will not be returned, and the case may be referred to Employee Plans Examinations. Any request for an extension of the 21-day time period must be made in writing within the 21-day time period and must be approved by the Service (by the applicable group manager).

(5) Additional failures discovered after initial submission . (a) A Plan Sponsor that discovers additional unrelated failures after its initial submission may request that such failures be added to its submission. However, the Service retains the discretion to reject the inclusion of such failures if the request is not timely (for example, if the Plan Sponsor makes its request when processing of the submission is substantially complete) or the application of VCP would be inappropriate or impracticable.

(b) If the Service discovers an unrelated failure while the request is pending, the failure generally will be added to the failures under consideration. However, the Service retains the discretion to determine that a failure is outside the scope of the voluntary request for consideration because the Plan Sponsor did not voluntarily bring this failure forward. In this case, if the additional failure is significant, all aspects of the plan may be examined and the rules pertaining to Audit CAP will apply.

(6) Conference right . If the Service initially determines that it cannot issue a compliance statement because the parties cannot agree upon correction or a change in administrative procedures, the Plan Sponsor (generally through the Plan Sponsor’s representative) will be contacted by the Service representative and offered a conference with the Service. The conference can be held either in person or by telephone and must be held within 21 calendar days of the date of contact. The Plan Sponsor will have 21 calendar days after the date of the conference to submit additional information in support of the submission. Any request for an extension of the 21-day time period must be made in writing within the 21-day time period and must be approved by the Service (by the applicable group manager). Additional conferences may be held at the discretion of the Service.

(7) Failure to reach resolution . If the Service and the Plan Sponsor cannot reach agreement with respect to the submission, the matter will be closed, the compliance fee will not be returned, and the case may be referred to Employee Plans Examinations. In the case of an Anonymous Submission that fails to reach resolution under this revenue procedure, the Service will refund 50% of the applicable VCP fee. See section 12 for the VCP fee.

(8) Issuance of compliance statement . (a) In general . If agreement has been reached and all applicable compliance fees have been paid, the Service will send to the Plan Sponsor a compliance statement signed by the Service specifying the corrective action required. However, the Service reserves the right to require the Plan Sponsor to sign the compliance statement.

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In such a case, the Service will send to the Plan Sponsor an unsigned compliance statement. Within 30 calendar days of the date the compliance statement is sent, the Plan Sponsor must sign and return the compliance statement along with any outstanding compliance fee that may be required. The Service will then issue a signed copy of the compliance statement to the Plan Sponsor. If the Plan Sponsor does not return the compliance statement (along with any outstanding compliance fee) within 30 calendar days, the VCP submission will be closed, and no further action will be taken with respect to the submission. In appropriate circumstances, the plan may be referred to Employee Plans Examinations.

(b) Model VCP Submission Compliance Statement . If the Plan Sponsor included the Appendix C Part I Model VCP Submission Compliance Statement (“Model Compliance Statement”) with its VCP submission, then the Service will sign and send to the Plan Sponsor the compliance statement specifying the corrective action required. The Service reserves the right to issue an individually drafted compliance statement in appropriate circumstances. The format and content of the Model Compliance Statement may not be modified or changed in any way.

(c) Modifications to VCP Submission. If a Plan Sponsor materially modifies a VCP submission that was previously filed with the Service, then, unless the Plan Sponsor has submitted a penalty of perjury statement (see section 11.08(1)) with respect to such subsequent modifications, the Plan Sponsor will be required to sign and return the compliance statement under the general procedures described in section 10.07(8)(a).

(9) Timing of correction . The Plan Sponsor must implement the specific corrections and administrative changes set forth in the compliance statement within 150 days of the date of the compliance statement. Any request for an extension of this time period must be made prior to the expiration of the correction period in writing and must be approved by the Service. Correction of the failure to adopt timely good faith amendments, interim amendments, or amendments relating to the implementation of optional law changes, as described in section 6.05(3)(a), must be made by the date of the submission. That is, the submission should include the executed amendments that would correct this failure. See section 6.02(5)(d)(ii) of this revenue procedure for a limited extension of the 150-day correction period set forth in this paragraph for Plan Sponsors taking action to locate lost participants.

(10) Modification of compliance statement . Once the compliance statement has been issued (based on the information provided), the Plan Sponsor cannot request a modification of the compliance terms except by a new request for a compliance statement. However, if the requested modification is minor and is postmarked within the correction period provided for in the compliance statement, the compliance fee will be equal to the lesser of one-half of the original compliance fee or $1,500. The request should be sent to the VCP mailing address provided for in section 11.12. The request should include a letter explaining the modification, a copy of the original compliance statement and related VCP submission, any other correspondence relating to the issuance of the original compliance statement, and a check for the VCP compliance fee payable to the United States Treasury, along with completed Forms 8950 and 8951.

(11) Verification . Once the compliance statement has been issued, the Service may require verification that the correction methods have been complied with and that any plan administrative procedures required by the compliance statement have been implemented. This verification does not constitute an examination of the books and records of the employer or the plan (within the meaning of § 7605(b)). If the Service determines that the Plan Sponsor did not implement the corrections and procedures within the stated time period, the plan may be referred to Employee Plans Examinations.

.08 Compliance statement . (1) General description of compliance statement . The compliance statement issued for a VCP submission only addresses the failures identified in the submission, the terms of correction (including any revision of administrative procedures), and the time period within which proposed corrections must be implemented (including any changes in administrative procedures). The compliance statement also provides that the Service will not treat the plan as failing to satisfy the applicable requirements of the Code on account of the

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failures described in the compliance statement if the conditions of the compliance statement are satisfied. The reliance provided by a compliance statement is limited to the specific failures and years specified and does not provide reliance for any other failure or year.

(2) Failure to adopt timely amendments . (a) Failure to amend plan timely . With respect to a failure to amend a plan timely for good faith amendments, interim amendments, or optional law changes, as described in section 6.05(3)(a) of this revenue procedure, the issuance of a compliance statement will result in the corrective amendments being treated as if they had been adopted timely for the purpose of determining the availability of the remedial amendment period in Rev. Proc. 2007–44. However, the issuance of such a compliance statement does not constitute a determination as to whether the good faith amendment, interim amendment, or other corrective amendment to reflect the implementation of optional law changes, as drafted, complies with the change in qualification requirement. The compliance statement does not constitute a determination as to whether the corrective amendment conforms the terms of the plan to the plan’s prior operations, and whether the amendment complies with the requirements of § 401(a), including the requirements of §§ 401(a)(4), 410(b), and 411(d)(6).

(b) Failure to adopt 403(b) Plan timely . A failure to adopt a 403(b) Plan in accordance with the final regulations under § 403(b) and Notice 2009–3 may be corrected under VCP. The issuance of a compliance statement will result in the 403(b) Plan being treated as if it had been adopted timely for the purpose of making available the extended remedial amendment period set forth in Announcement 2009–89. However, the issuance of a compliance statement does not constitute a determination as to whether the written plan, as drafted, complies with the applicable requirements of § 403(b) and the final § 403(b) regulations.

(3) Administrative procedures required . Where current procedures are inadequate for operating the plan in conformance with the applicable requirements of the Code, the compliance statement will be conditioned upon the implementation of stated administrative procedures. The Service may prescribe appropriate administrative procedures in the compliance statement.

(4) Compliance statement conditioned upon timely correction . The compliance statement is conditioned on (i) there being no misstatement or omission of material facts in connection with the submission and (ii) the implementation of the specific corrections and satisfaction of any other conditions in the compliance statement.

(5) Authority delegated . Compliance statements (including relief from any excise tax or other penalty as provided under section 6.09) are authorized to be signed by managers within Employee Plans Rulings and Agreements, under the Tax Exempt and Government Entities Operating Division of the Service.

.09 Effect of compliance statement on examination . The compliance statement is binding upon both the Service and the Plan Sponsor or Eligible Organization (as defined in section 10.11(2)) with respect to the specific tax matters identified therein for the periods specified, but does not preclude or impede an examination of the plan by the Service relating to matters outside the compliance statement, even with respect to the same taxable year or years to which the compliance statement relates.

.10 Special rules relating to Anonymous Submissions . (1) The Anonymous Submission procedure in this section 10.10 permits submission of a Qualified Plan, 403(b) Plan, SEP, and SIMPLE IRA Plan under VCP without initially identifying the applicable plan, the Plan Sponsor, or the Eligible Organization. The requirements of this revenue procedure relating to VCP, including sections 10, 11, and 12, apply to these submissions. Information identifying the plan or the Plan Sponsor may be redacted (and the power of attorney statement and the penalty of perjury statement need not be included with the initial submission). In addition, if a determination letter application will be requested as part of the submission, the determination letter application should not be submitted until the time all identifying information is provided to the Service. For purposes of processing the submission, the state of the Plan Sponsor must be identified in the initial submission. All Anonymous Submissions must be numbered or labeled on the first page of the VCP submission by the Plan Sponsor or its representative to facilitate

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identification and tracking of the submission. The identification number must be unique to the submission and should not be used with respect to any other Anonymous Submission of the Plan Sponsor or representative. If the submission is made by an individual who represents the Plan Sponsor, such individual must satisfy the power of attorney requirements described in section 11.07. As part of the submission, the representative must, under penalty of perjury, assert that the representative complies with the power of attorney requirements described in section 11.07 and that the representative will submit an executed copy of a Form 2848 upon the disclosure of the identity of the Plan Sponsor to the Service. Once the Service and the plan representative reach agreement with respect to the submission, the Service will contact the plan representative in writing indicating the terms of the agreement. The Plan Sponsor will have 21 calendar days from the date of the letter of agreement to identify the plan and Plan Sponsor. If the Plan Sponsor does not submit the identifying material (including the power of attorney statement and the penalty of perjury statement) within 21 calendar days from the date of the letter of agreement, the matter will be closed and the compliance fee will not be returned.

(2) Notwithstanding section 10.04, until each plan and Plan Sponsor is identified to the Service, a submission under this subsection does not preclude or impede an examination of the Plan Sponsor or its plan. Thus, a plan submitted under the Anonymous Submission procedure that comes Under Examination prior to the date the identifying materials of each plan and Plan Sponsor are received by the Service will no longer be eligible under VCP.

.11 Special rules relating to Group Submissions . (1) General rules . An Eligible Organization may submit a VCP request for a Qualified Plan, a 403(b) Plan, a SEP, or a SIMPLE IRA Plan under a Group Submission for Plan Document, Operational, and Employer Eligibility Failures. If a sponsor of a master or prototype plan submits failures with respect to more than one master or prototype plan, each plan will be treated as a separate submission and a separate fee must be submitted for each prototype plan. Similarly, if a Volume Submitter practitioner submits failures with respect to more than one Volume Submitter Specimen plan, each plan will be treated as a separate submission and a separate fee must be submitted for each specimen plan. For this purpose, in the case of either the prototype plan or specimen plan, the number of plans is determined with reference to the number of basic plan documents, not adoption agreements. See section 12.05.

(2) Eligible Organizations . For purposes of a Group Submission, the term “Eligible Organization” means either (a) a Sponsor (as that term is defined in section 4.07 of Rev. Proc. 2005–16, 2005–10 I.R.B. 674, or Rev. Proc. 2011–49, 2011–44 I.R.B. 608) of a master or prototype plan, (b) a Volume Submitter practitioner, as that term is defined in section 13.04 of Rev. Proc. 2005–16 or section 13.05 of Rev. Proc. 2011–49, 2011–44 I.R.B. 608, (c) an insurance company or other entity that has issued annuity contracts or provides services with respect to assets for 403(b) Plans, or (d) an entity that provides its clients with administrative services with respect to Qualified Plans, 403(b) Plans, SEPs, or SIMPLE IRA Plans. An Eligible Organization is not eligible to make a Group Submission unless the failures in the submission result from a systemic error involving the Eligible Organization that affects at least 20 plans and results in at least 20 plans implementing correction. If, at any time before the Service issues the compliance statement, the number of plans falls below 20, the Eligible Organization must notify the Service that it is no longer eligible to make a Group Submission. Under these circumstances, the compliance fee may be retained by the Service.

(3) Special Group Submission procedures . (a) In general, a Group Submission is subject to the same procedures as any VCP submission in accordance with sections 10 and 11, except that the Eligible Organization is responsible for performing the procedural obligations imposed on the Plan Sponsor under sections 10 and 11. See section 11.03(12) for a special submission requirement with respect to Group Submissions.

(b) The Eligible Organization must provide notice to all Plan Sponsors of the plans included in the Group Submission. The notice must be provided at least 90 days before the Eligible Organization provides the Service with the information required in section 10.11(3)(c). The purpose of the notice is to provide each Plan Sponsor with information relating to the Group Submission request. The notice should explain the reason for the Group Submission and inform

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