SECTION 3. EARNINGS — Internal Revenue Bulletin 2013-4

ADJUSTMENT METHODS AND EXAMPLES

the plan loans that were made available. This paragraph does not apply unless (i) the amendment satisfies § 401(a), and (ii) the plan as amended would have satisfied the qualification requirements of § 401(a) (and the requirements applicable to plan loans under § 72(p)) had the amendment been adopted when plan loans were first made available.

(b) Example .

Example 26 : Employer K, a for-profit corporation, maintains a § 401(k) plan. Although plan provisions in 2005 did not provide for hardship distributions, beginning in 2005 hardship distributions of amounts allowed to be distributed under § 401(k) were made currently and effectively available to all employees (within the meaning of § l.401(a)(4)–4). The standard used to determine hardship satisfied the deemed hardship distribution standards in § 1.401(k)–1(d). Hardship distributions were made to a number of employees during the 2005 and 2006 plan years, creating an Operational Failure. The failure was discovered in 2007.

Correction : Employer K corrects the failure under VCP by adopting a plan amendment, effective January 1, 2005, to provide a hardship distribution option that satisfies the rules applicable to hardship distributions in § 1.401(k)–1(d). The amendment provides that the hardship distribution option is available to all employees. Thus, the amendment satisfies § 401(a), and the plan as amended in 2005 would have satisfied § 401(a) (including § 1.401(a)(4)–4 and the requirements applicable to hardship distributions under § 401(k)) if the amendment had been adopted in 2005.

(3) Early Inclusion of Otherwise Eligible Employee Failure . (a) Plan Amendment Correc- tion Method . The Operational Failure of including an otherwise eligible employee in the plan who either (i) has not completed the plan’s minimum age or service requirements, or (ii) has completed the plan’s minimum age or service requirements but became a participant in the plan on a date earlier than the applicable plan entry date, may be corrected by using the plan amendment correction method set forth in this paragraph. The plan is amended retroactively to change the eligibility or entry date provisions to provide for the inclusion of the ineligible employee to reflect the plan’s actual operations. The amendment may change the eligibility or entry date provisions with respect to only those ineligible employees that were wrongly included, and only to those ineligible employees, provided (i) the amendment satisfies § 401(a) at the time it is adopted, (ii) the amendment would have satisfied § 401(a) had the amendment been adopted at the earlier time when it is effective, and (iii) the employees affected by the amendment are predominantly nonhighly compensated employees. For a defined benefit plan, a contribution may have to be made to the plan for a correction that is accomplished through a plan amendment if the plan is subject to the requirements of § 436(c) at the time of the amendment, as described in section 6.02(4)(e)(ii).

(b) Example .

Example 27 : Employer L maintains a § 401(k) plan applicable to all of its employees who have at least six months of service. The plan is a calendar year plan. The plan provides that Employer L will make matching contributions based upon an employee’s salary reduction contributions. In 2007, it is discovered that all four employees who were hired by Employer L in 2006 were permitted to make salary reduction contributions to the plan effective with the first weekly paycheck after they were employed. Three of the four employees are nonhighly compensated. Employer L matched these employees’ salary reduction contributions in accordance with the plan’s matching contribution formula. Employer L calculates the ADP and ACP tests for 2006 (taking into account the salary reduction and matching contributions that were made for these employees) and determines that the tests were satisfied.

Correction : Employer L corrects the failure under SCP by adopting a plan amendment, effective for employees hired on or after January 1, 2006, to provide that there is no service eligibility requirement under the plan and submitting the amendment to the Service for a determination letter.

.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 a Plan Sponsor 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

January 22, 2013 390 2013–4 I.R.B.

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 adjustment 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 period of the failure is the date as of which the account balance was improperly reduced. See section 6.02(4)(f) of this revenue procedure.

(b) Rules for Beginning Date for Exclusion of Eligible Employees from Plan . (i) General Rule . In the case of an exclusion of an eligible employee from a plan contribution, the beginning of the period of the failure is the date on which contributions of the same type ( e.g., elective deferrals, matching contributions, or discretionary nonelective employer contributions) were made for other employees for the year of the failure. In the case of an exclusion of an eligible employee from an allocation of a forfeiture, the beginning of the period of the failure is the date on which forfeitures were allocated to other employees for the year of the failure.

(ii) Exclusion from a § 401(k) or (m) Plan . For administrative convenience, for purposes of calculating the Earnings rate for corrective contributions for a plan year (or the portion of the plan year) during which an employee was improperly excluded from making periodic elective deferrals or after-tax employee contributions, or from receiving periodic matching contributions, the Plan Sponsor may treat the date on which the contributions would have been made as the midpoint of the plan year (or the midpoint of the portion of the plan year) for which the failure occurred. Alternatively, in this case, the Plan Sponsor may treat the date on which the contributions would have been made as the first date of the plan year (or the portion of the plan year) during which an employee was excluded, provided that the Earnings rate used is one half of the Earnings rate applicable under section 3.01(3) for the plan year (or the portion of the plan year) for which the failure occurred.

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(3) Earnings Rate . (a) General Rule . For purposes of this section 3, the Earnings rate generally is based on the investment results that would have applied to the corrective contribution or allocation if the failure had not occurred.

(b) Multiple Investment Funds . If a plan permits employees to direct the investment of account balances into more than one investment fund, the Earnings rate is based on the rate applicable to the employee’s investment choices for the period of the failure. For administrative convenience, if most of the employees for whom the corrective contribution or allocation is made are nonhighly compensated employees, the rate of return of the fund with the highest rate of return 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 rate of return 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 28 .)

(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 29 .)

(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

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the plan’s method for allocating other Earnings for that valuation period in accordance with section 3.01(4)(b). (See Example 30 .)

(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 accordance 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 31 .)

.02 Examples .

Example 28 : 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 investment return 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:

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 (December 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, excluding 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

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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.)

TABLE 1

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%	$7501	All 12/31/1997 Account Balances4
1999 Earnings	10%	$5752	Employee X ($500)/ All 12/31/1998 Account Balances ($75)4
Second Partial Valuation Period Earnings	12%	$7593	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% 4 After reduction for distributions during the year for which Earnings are being determined but without regard to contributions received during the year for which Earnings are being determined.

Example 29 : The facts are the same as in Example 28 . Earnings Adjustment on the Corrective Contribution : The earnings amount on the corrective contribution is the same as in Example 28, but the earnings amount is allocated using the specific employee allocation 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 balance 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.)

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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%	$7501	Employee X
1999 Earnings	10%	$5752	Employee X
Second Partial Valuation Period Earnings	12%	$7593	Employee X
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 30 : The facts are the same as in Example 28 . Earnings Adjustment on the Corrective Contribution : The earnings amount on the corrective contribution is the same as in Example 28, 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(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.)

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TABLE 3

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%	$7501	Employee X
1999 Earnings	10%	$5752	Employee X
Second Partial Valuation Period Earnings	12%	$7593	12/31/99 Account Balances (including 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 31 : The facts are the same as in Example 28 . Earnings Adjustment on the Corrective Contribution : The earnings amount on the corrective contribution is the same as in Example 28, 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, 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 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 contribution 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.

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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%	$7501	12/31/99 Account Balances (including Employee X’s $5,575)4
1999 Earnings	10%	$5752	Employee X
Second Partial Valuation Period Earnings	12%	$7593	12/31/99 Account Balances (including 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% 4 After reduction for distributions during the year for which Earnings are being determined but without regard to contributions received during the year for which Earnings are being determined.

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APPENDIX C Model VCP Submission Documents

INSTRUCTIONS

Appendix C is composed of two parts.

Part I sets forth a Model Compliance Statement, which is designed to assist VCP applicants by providing a standardized framework to complete the VCP submission process. The Model Compliance Statement helps to ensure that applicants are including all necessary information needed for processing a VCP submission. The format and content of the Model Compliance Statement may not be modified in any way.

Part II contains Schedules (formerly Appendix F Schedules) that set forth standardized descriptions of failures and correction methods that can be used to resolve certain qualification failures. These Schedules can be used with the Model Compliance Statement by attaching the appropriate Schedule to the applicable parts of the Model Compliance Statement. If you are not using the Model Compliance Statement, the Schedules still may be used to satisfy the requirements of section 11.03 of Rev. Proc. 2013–12 relating to the description of qualification failures, correction methods, and changes to plan administrative procedures. However, if a Schedule is used, the format and content may not be modified.

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APPENDIX C-PART I MODEL VCP SUBMISSION COMPLIANCE STATEMENT

Plan Name: EIN: Plan #: (Please include the plan name, Applicant’s EIN, and plan number on each page of the compliance statement.)

SECTION I. PLAN INFORMATION

APPLICANT’S NAME
APPLICANT’S EIN 3. PLAN NO. (do not use Social Security Number)
PLAN NAME

SECTION II. APPLICANT’S DESCRIPTION OF FAILURES

Attach additional pages, as needed. Label attachment “SECTION II. APPLICANT’S DESCRIPTION OF FAILURES.” List and number each failure separately. If using the Appendix C, Part II Schedules, simply specify the Schedule(s) that are to be part of this compliance statement and attach them to this compliance statement.

SECTION III. APPLICANT’S DESCRIPTION OF THE PROPOSED METHOD OF CORRECTION

Attach additional pages, as needed. Label attachment “SECTION III. APPLICANT’S DESCRIPTION OF THE PROPOSED METHOD OF CORRECTION.” Describe the correction method applicable to each failure listed in Section II. If using the Appendix C, Part II Schedules, simply specify the Schedule(s) that are to be part of this compliance statement and attach them to this compliance statement.

SECTION IV. APPLICANT’S PROPOSED PROCEDURES TO LOCATE AND NOTIFY FORMER EMPLOYEES OR BENEFICIARIES

Attach additional pages, as needed. Label attachment “SECTION IV. APPLICANT’S PROPOSED PROCEDURES TO LOCATE AND NOTIFY FORMER EMPLOYEES OR BENEFICIARIES.” Describe the method(s) that will be used to locate and notify former employees and beneficiaries, or provide an affirmative statement that no former employees or beneficiaries were affected by each failure listed in Part II or will be affected by the correction methods described in Section III. See section 6.02(5) (d) of Rev. Proc. 2013–12.

SECTION V. APPLICANT’S PROPOSED REVISION TO ADMINISTRATIVE PROCEDURES

Attach additional pages, as needed. Label attachment “SECTION V. APPLICANT’S PROPOSED REVISION TO ADMINISTRATIVE PROCEDURES.” Please include an explanation of how and why the failures arose and a description of the measures that will be implemented to ensure that the same failures do not occur in the future. If using the Appendix C, Part II Schedules, simply specify the Schedule(s) that are to be part of this compliance statement and attach them to this compliance statement.

SECTION VI. REQUESTS RELATED TO EXCISE TAXES, ADDITIONAL TAX, AND TAX REPORTING

The Applicant requests that the Internal Revenue Service (“Service”) not pursue the following taxes under the Internal Revenue Code (“Code”) (attach supporting rationale as required by section 6.09 of Rev. Proc. 2013–12):

Excise tax under Code section 4972 with respect to failure(s) # .

Excise tax under Code section 4973 with respect to failure(s) # .

Excise tax under Code section 4974 with respect to failure(s) # .

Excise tax under Code section 4979 with respect to failure(s) # .

Imposition of additional tax under Code section 72(t) with respect to failure(s) # .

2013–4 I.R.B. 399 January 22, 2013

Plan Name: EIN: Plan #:

The Applicant requests that the Service grant the following with respect to plan loan failures as described in section 6.07 of Rev. Proc. 2013–12:

With respect to failure(s) # , that a deemed distribution corrected pursuant to this VCP submission not be required to be reported on Form 1099-R and that repayments made by such correction not result in the affected participant having additional basis in the plan for purposes of determining the tax treatment of subsequent distributions from the plan.

With respect to failure(s) # , that a deemed distribution be reported on Form 1099-R with respect to affected participants for the year of correction instead of the year of the failure.

SECTION VII. ENFORCEMENT RESOLUTION (to be completed by IRS only)

The Applicant will neither attempt to nor otherwise amortize, deduct, or recover from the Service any portion of the compliance fee nor receive any Federal tax benefit on account of payment of such compliance fee.

The Service will not pursue the sanction of revoking the tax-favored status of the plan under § 401(a), 403(b), 408(k), or 408(p) of the Internal Revenue Code (“Code”) on account of the failure(s) described in this submission. This compliance statement considers only the acceptability of the correction method(s) and the revision(s) of administrative procedures described in the submission and does not express an opinion as to the accuracy or acceptability of any calculations or other materials submitted with the submission. The reliance provided by this compliance statement is limited to the specific failures and years specified and does not provide reliance for any other failure or year. In no event may this compliance statement be relied on for the purpose of concluding that the plan or Plan Sponsor was not a party to an abusive tax avoidance transaction. The compliance statement should not be construed as affecting the rights of any party under any other law, including Title I of the Employee Retirement Income Security Act of 1974.

This compliance statement is conditioned on (1) there being no misstatement or omission of material facts in connection with the submission and (2) the completion of all corrections described in this compliance statement within one hundred fifty (150) days of the date of the compliance statement.

The Service will treat the failure to adopt interim amendments or amendments for optional law changes, as described in section 6.05(3)(a) of Rev. Proc. 2013–12 as if they had been adopted timely for the purpose of making available the extended remedial amendment period currently set forth in Revenue Procedure 2007–44, 2007–2 C.B. 54, or its successors. However, this compliance statement does not constitute a determination as to whether any such plan amendments, as drafted, comply with the applicable changes in qualification requirements.

With regard to failure # relating to the 403(b) Plan failure to timely adopt a written plan, as required under the final § 403(b) regulations and Notice 2009–3, the Service will treat the written plan as if it had been adopted timely for the purposes of making available the extended remedial amendment period set forth in Announcement 2009–89. However, this compliance statement does not constitute a determination as to whether the written plan, as drafted, complies with the applicable requirements associated with § 403(b) and the final § 403(b) regulations.

With regard to failure # (provided that no modification has been made to either the plan document or adoption agreement of the plan that would otherwise cause the employer to lose reliance on the plan’s opinion or advisory letter), the corrective amendment will not cause the plan to lose its status as a Master or Prototype plan or Volume Submitter plan and (provided that no modification has been made that would otherwise affect the employer’s eligibility for the six-year remedial amendment cycle) the employer will be allowed to remain within the six-year remedial amendment cycle described in Revenue Procedure 2007–44, 2007–2 C.B. 54, on a continuing basis until the expiration of the next six-year remedial amendment cycle as provided in section 18.01 of Rev. Proc. 2007–44, or, if different, the deadline announced by the Service, as provided in section 18.03 of that revenue procedure. In addition, the issuance of this compliance statement constitutes a determination of the effect of the corrective plan amendment on the qualification of the plan, and a subsequent filing of a determination letter request on such amendment will not be required until the expiration of the next six-year remedial amendment cycle.

The Service will not pursue the following on account of the qualification failure(s) described in this submission:

Excise tax under Code section 4972.

Excise tax under Code section 4973.

Excise tax under Code section 4974.

Excise tax under Code section 4979.

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Plan Name: EIN: Plan #:

With respect to the Overpayment failures described in this submission that were corrected by removing improper distributions from the IRA(s) of the affected participant(s) and returning those distributions to the plan, the Service will not pursue % of the 10% additional income tax under Code § 72(t).

With respect to the loan failure(s) described in this submission:

Loan(s) that are corrected in accordance with one of the methods described in section 6.07(2) or 6.07(3) of Rev. Proc. 2013–12: The Service will not require deemed distributions under Code § 72(p) to be reported on Form 1099-R with respect to the participant(s) affected by the failure(s), and repayments made pursuant to the correction of such loan(s) will not result in an affected participant having additional basis in the plan for the purpose of determining the tax treatment of subsequent distributions from the plan to such participant(s).

Loan(s) that are not being corrected in accordance with one of the methods described in section 6.07(2) or 6.07(3) of Rev. Proc. 2013–12: The Service will require deemed distributions under Code § 72(p) to be reported on Form 1099-R with respect to the participant(s) affected by the failure(s). However, the plan will be permitted to report deemed distributions on Form 1099-R in the year of correction, instead of the year of the failure.

Approved:

Manager, Employee Plans Voluntary Compliance Tax Exempt and Government Entities Division

Date:

2013–4 I.R.B. 401 January 22, 2013

APPENDIX C PART II, SCHEDULE 1 Interim and Certain Discretionary Nonamender Failures

Plan Name: EIN: Plan #: (Please include the plan name, Applicant’s EIN, and plan number on each page of the submission, including attachments.)

Instructions :

(1) This Schedule 1 can be used to report the correction of a failure to timely adopt good faith, interim amendments, or discretionary amendments required because of the plan’s implementation of an optional law change. Correction under this Schedule 1 results in the corrective amendment being treated as if it had been timely adopted for purposes of determining the availability of the extended remedial amendment period. Thus, a Plan Sponsor may use this Schedule 1 for the failure to adopt a required interim or discretionary amendment ONLY if the corrective amendment was adopted before the expiration of the plan’s extended remedial amendment period (as determined under Rev. Proc. 2007–44) for that amendment. If the corrective amendment was adopted after the expiration of the extended remedial amendment period, then the Plan Sponsor must use Appendix C Part II, Schedule 2.

(2) In accordance with (1) above, this Schedule 1 may be used to correct the failure to timely adopt a discretionary amendment required because of the plan’s implementation of an optional law change. For other failures to operate the plan in accordance with plan terms, do not use this Schedule 1.

(3) All corrective amendments must be properly identified. Separate signed and dated amendments should be submitted. If the amendments are incorporated into a signed and dated restated document, the VCP submission must specify the page and section of the document that contains the amendment.

SECTION I. IDENTIFICATION OF FAILURES

(1) Were the amendments used to correct the failures under this Schedule 1 adopted before the expiration of the applicable extended remedial amendment period? Check applicable box and follow applicable instruction below:

YES

If “Yes,” proceed to (2) of this Section 1.

If “No,” STOP — do NOT use this Schedule 1 .In cases where late or non-amender failures are corrected after the expiration of the plan’s extended remedial amendment period, use Schedule 2.

(2) Were the amendments adopted to correct the failure to timely adopt interim amendments or amendments required to implement optional law changes (see section 6.05(3)(a) of Rev. Proc. 2013–12)?

YES

If “Yes,” proceed to (3) of this Section I.

If “No,” STOP — do NOT use this Schedule 1

(3) The Plan Sponsor identified did not timely adopt amendments for the following:

(List each statutory, regulatory, or other requirement for which the Plan was not timely amended, and specify for each such requirement the published cumulative list in which such requirement appears and the location of the corrective amendment in the documents included with the VCP submission (for example, by amendment number and paragraph number, or in the case of a restated plan, by page and section number). Do not use a general statement referring only to a cumulative list or statute. For instance, the following description would not be acceptable: “All interim amendments associated with the 20XX cumulative list

[or the Pension Protection Act of 2006 (PPA)] were not timely adopted.”)

Attach additional pages as needed. Label the attachment “Identification of Nonamender Failures” and include the plan name, plan sponsor’s EIN and plan number on each page.)

January 22, 2013 402 2013–4 I.R.B.

Plan Name: EIN: Plan #:

SECTION II. DESCRIPTION OF PROPOSED METHOD OF CORRECTION

The Plan Sponsor has adopted amendments reflecting the items listed in Section I(3) of this Schedule 1. These amendments are effective retroactive to the effective dates of the specific provisions contained in the amendments. The signed and dated amendments have been enclosed with this submission.

SECTION III. CHANGE IN ADMINISTRATIVE PROCEDURES

The Applicant has taken the following step(s) to ensure that the failure(s) will not recur:

SECTION IV. ENCLOSURES

In addition to the applicable items listed on the Procedural Requirements Checklist for Form 8950, the Plan Sponsor encloses copies of the signed and dated amendments used to correct the failure(s) identified in Part I of this Schedule 1.

2013–4 I.R.B. 403 January 22, 2013

APPENDIX C PART II, SCHEDULE 2 Nonamender Failures (other than those to which Schedule 1 applies) and Failure to Adopt a 403(b) Plan Timely

Plan Name: EIN: Plan #: (Please include the plan name, Applicant’s EIN, and plan number on each page of the submission, including attachments.)

SECTION I. IDENTIFICATION OF FAILURES

A. Qualified Plans: The plan identified above was not amended to comply with the applicable provisions of the following legislative and regulatory requirements by the applicable deadlines in accordance with § 401(b) and the regulations thereunder:

The Employee Retirement Income Security Act of 1974 (ERISA)

The Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA)

The Deficit Reduction Act of 1984 (DEFRA)

The Retirement Equity Act of 1984 (REA)

The Tax Reform Act of 1986 (TRA ’86)

The Unemployment Compensation Amendments of 1992 (UCA)

The Omnibus Budget Reconciliation Act of 1993 (OBRA)

GUST (includes The Uruguay Round Agreements Act, the Uniformed Services Employment and Reemployment Rights Act of 1994, the Small Business Job Protection Act of 1996, the Taxpayer Relief Act of 1997, the Internal Revenue Service Restructuring and Reform Act of 1998, and the Community Renewal Tax Relief Act of 2000)

The changes required by the Cumulative List for the plan’s last on-cycle year:

The changes required by the 2004 Cumulative List (Notice 2004–84, 2004–2 C.B. 1030) for an eligible employer using a pre-approved defined contribution plan who failed to adopt the pre-approved plan by 4/30/10, as required by Announcement 2008–23, 2008-1 C.B. 731.

The changes required by the 2005 Cumulative List (Notice 2005–101, 2005–2 C.B. 1219) for Cycle A individually designed plans.

The changes required by the 2006 Cumulative List (Notice 2007–3, 2007–1 C.B. 255) for Cycle B individually designed plans, and any eligible employer using a pre-approved defined benefit plan who failed to adopt the pre-approved plan by 4/30/12, as required by Announcement 2010–20, 2010–15 I.R.B. 551.)

The changes required by the 2007 Cumulative List (Notice 2007–94, 2007–2 C.B. 1179) for Cycle C individually designed plans.

The changes required by the 2008 Cumulative List (Notice 2008–108, 2008–50 I.R.B. 1275) for Cycle D individually designed plans.

The changes required by the 2009 Cumulative List (Notice 2009–98, 2009–52 I.R.B. 974) for Cycle E individually designed plans.

The changes required by the 2010 Cumulative List (Notice 2010–90, 2010–52 I.R.B. 909) for Cycle A individually designed plans.

The changes required by the 2011 Cumulative List (Notice 2011–97, 2011–52 I.R.B. 923) for Cycle B individually designed plans.

The changes required by the 2012 Cumulative List (Notice 2012–76, 2012–52 I.R.B. 775) for Cycle C individually designed plans.

Amendments required as a condition for a favorable determination letter. If this item was selected answer the following questions by checking the applicable boxes:

Is this the sole failure for the VCP submission? Yes No

January 22, 2013 404 2013–4 I.R.B.

Plan Name: EIN: Plan #:

Were the amendments signed within three months of the expiration of the remedial amendment period for adopting the amendments? Yes No

Other (specify the legal requirement and applicable Cumulative List):

B. 403(b) Plan:

The Plan Sponsor did not timely adopt a written plan as required by the final 403(b) regulations and Notice 2009–3, 2009–2 I.R.B. 250.

SECTION II. DESCRIPTION OF PROPOSED METHOD OF CORRECTION

A. Qualified Plan. The Plan Sponsor has adopted (or will adopt) amendments that satisfy the requirements of all of the items checked in Section IA of this Appendix C Part II, Schedule 2, retroactively to the effective dates of the specific provisions contained in the amendments. The amendments and restated plan documents (where applicable) are enclosed with this submission.

B. 403(b) Plan. Failure to adopt a written plan timely. The Plan Sponsor has adopted a written plan retroactive to the later of the effective date of the final 403(b) regulations or the initial effective date of the plan. A copy of the signed and dated 403(b) plan is enclosed with this submission.

SECTION III. CHANGE IN ADMINISTRATIVE PROCEDURES

The Plan Sponsor has taken the following step(s) to ensure that the failure(s) will not recur:

SECTION IV. ENCLOSURES

In addition to the applicable items listed on the Procedural Requirements Checklist for Form 8950, the Plan Sponsor encloses the following documents, as appropriate, with this submission:

Copies of all amendments used to correct the failure(s), either as adopted or in proposed form,
A copy of the plan document in effect prior to any of the amendments used to correct the failure(s),
A copy of the most recent determination letter issued with respect to the plan (if applicable),

2013–4 I.R.B. 405 January 22, 2013

Plan Name: EIN: Plan #:

If required by Section 6.05 of Rev. Proc. 2013–12, a determination letter application (Form 5300, 5307, or 5310 along with Form 8717 and the applicable user fee payment made payable to the United States Treasury), or
For 403(b) Plans, a copy of the signed and dated 403(b) plan document.

January 22, 2013 406 2013–4 I.R.B.

APPENDIX C PART II, SCHEDULE 3

SEPs and SARSEPs

Plan Name: EIN: Plan #: (Please include the plan name, Applicant’s EIN, and plan number on each page of the submission, including attachments.)

Instructions: This Schedule 3 is available for Simplified Employee Pension plans (SEPs), including SEPs that include salary reduction arrangements ( i.e. Salary Reduction Simplified Employee Pension plans (SARSEPs)).

SECTION I. IDENTIFICATION OF FAILURE(S) AND PROPOSED METHOD(S) OF CORRECTION

The following failure(s) occurred with respect to the plan identified above. Check the failure(s) that apply. Within each failure, check applicable boxes, and provide the information requested:

A. Employer Eligibility Failure (SARSEPs only)

The Plan Sponsor was not eligible to sponsor a SARSEP because the plan was established on

. (Plan Sponsors were not permitted to establish SARSEPs after December 31, 1996.)

The plan was adopted by a Plan Sponsor who was (or subsequently became) ineligible to sponsor a SARSEP under the requirements of § 408(k)(6) because the Plan Sponsor (and, if applicable its related controlled group or affiliated service group employers) had more than 25 employees (including leased employees, if applicable) during the following plan year(s):

The plan was adopted by a Plan Sponsor that became ineligible to sponsor a SARSEP under the requirements of § 408(k)(6) because, in one or more plan year(s), fewer than 50% of the employees eligible to participate in the plan elected to make salary reduction contributions. The failure occurred during the following plan year(s):

Description of Proposed Method of Correction :

All contributions ceased as of (insert date beginning no later than the date this VCP submission is filed with the Service). The Plan Sponsor will not permit any new salary reduction contributions to the plan.

B. Failure to satisfy the deferral percentage test (SARSEPs only)

At least one highly compensated employee (“HCE”) deferred an amount which, as a percentage of compensation, was more than 125% of the average deferral percentage (“ADP”) for all nonhighly compensated employees (“NHCEs”) eligible to participate in the plan (§ 408(k)(6)(A)(iii)). The total excess deferrals for each affected plan year were as follows:

2013–4 I.R.B. 407 January 22, 2013

Plan Name: EIN: Plan #:

Description of the Proposed Method of Correction

The Plan Sponsor has made (or will make) nonforfeitable contributions on behalf of all eligible NHCEs. Each eligible NHCE will receive a contribution equal to a uniform percentage of compensation. The uniform percentage is equal to the difference between the (1) ADP that would have been required for an HCE’s deferral percentage to have passed the nondiscrimination test and (2) the actual ADP for NHCEs. ( Example: In a particular plan year, an HCE defers 10% of compensation. The ADP for NHCEs for the same plan year is 5% of compensation. However, in order for the plan to pass the nondiscrimination test, the ADP should have been 8% of compensation. The corrective contribution on behalf of each eligible NHCE will be equal to 3% of compensation.) The corrective contribution made on behalf of each NHCE will also be adjusted for Earnings. Earnings will be calculated from the last day of the plan year for which the failure occurred through the date of the corrective contribution. The corrective contribution (adjusted for Earnings) will be made to each affected NHCE’s SARSEP IRA account. If an affected employee does not have a SARSEP IRA account, a SARSEP IRA account will be established for that employee. Earnings will be calculated for an affected NHCE’s account on the basis of one of the following methods (check one):

Actual investment results of the affected NHCE’s SARSEP IRA account.

The interest rate incorporated in the Department of Labor’s Voluntary Fiduciary Correction Program Online Calculator (“VFCP Online Calculator”) ( http://www.dol.gov/ebsa/calculator/main.html ), since the actual Earnings of the affected NHCE’s SARSEP IRA account cannot be ascertained.

Actual investment results for years in which data is available, or the rate incorporated in the VFCP Online Calculator for years in which the actual Earnings of the affected NHCE’s SARSEP IRA account cannot be ascertained. The VFCP Online Calculator was or will be used for the following year(s):

The total corrective contribution (before adjusting for Earnings) on behalf of the affected NHCEs for each plan year is as follows:

Former employees affected by the failure (check one):

There are no former employees affected by the failure.

Affected former employees (or if deceased, their estate or known beneficiary) will be contacted, and corrective contributions will be made to their SARSEP IRA accounts. To the extent that an affected former employee or beneficiary cannot be located following a mailing to the last known address, the Plan Sponsor will take the actions specified below to locate that employee or beneficiary:

January 22, 2013 408 2013–4 I.R.B.

Plan Name: EIN: Plan #:

After such actions are taken, if an affected employee or beneficiary is not found but is subsequently located on a later date, the Plan Sponsor will make corrective contributions to the affected SARSEP IRA account at that time.

C. Failure to Make Required Employer Contributions (SEPs or SARSEPs)

The Plan Sponsor failed to make employer contributions on behalf of eligible employees as required under the terms of the plan.

The failure occurred on account of the erroneous exclusion of eligible employees.

Other (describe):

The failure occurred for the following plan year(s):

Description of the Proposed Method of Correction :

The Plan Sponsor has contributed (or will contribute) additional amounts to the plan on behalf of each affected employee. For each affected employee, the corrective contribution will be determined by calculating the contribution the employee would have been entitled to under the terms of the plan and subtracting any contributions already made on behalf of the participant for the plan year. The required contribution made on behalf of an affected participant will be adjusted for Earnings. Earnings will be calculated from the last day of the plan year for which the failure occurred through the date of the corrective contribution. The corrective contribution (adjusted for Earnings) will be made to each affected employee’s SEP (or SARSEP, if applicable) IRA account. If an affected employee does not have a SEP (or SARSEP, if applicable) IRA account, a SEP (or SARSEP, if applicable) account will be established for that employee.

The total corrective contribution (before adjusting for Earnings) for each year is:

Earnings will be calculated for an affected employee on the basis of the following method(s) (check one):

Actual investment results of the affected employee’s SEP or SARSEP IRA account.

The interest rate incorporated in the VFCP Online Calculator, since the actual Earnings of the affected employee’s IRA account cannot be ascertained.

Actual investment results for years in which data is available, or the rate incorporated in the VFCP Online Calculator for years in which the actual Earnings of the affected employee’s IRA cannot be ascertained. The VFCP Online Calculator was or will be used for the following year(s):

Former employees affected by the failure (check one):

There are no former employees affected by the failure.

Affected former employees (or if deceased, their estate or known beneficiary) will be contacted, and corrective contributions will be made to their SEP or SARSEP IRA accounts. To the extent that an affected former employee or beneficiary cannot be located following a mailing to the last known address, the Plan Sponsor will take the actions specified below to locate that employee or beneficiary:

2013–4 I.R.B. 409 January 22, 2013

Plan Name: EIN: Plan #:

D. Failure to provide eligible employees with the opportunity to make elective deferrals (SARSEPs only)

The plan did not provide employee(s) who satisfied the applicable eligibility requirements with the opportunity to make elective deferrals to the SAR SEP. The failure occurred for the following plan year(s):

Description of the Proposed Method of Correction:

The Plan Sponsor has contributed (or will contribute) additional amounts to the plan on behalf of each affected employee. The corrective contribution will be made to compensate the affected employee(s) for the missed deferral opportunity. The corrective contribution on behalf of each affected employee is equal to 50% of what the employee’s deferral might have been had he or she been provided with the opportunity to make elective deferrals to the plan. Since the employee’s deferral decision is not known, the deferral amount is estimated by determining the average of the deferral percentages for the employee’s group (highly compensated or nonhighly compensated). ( Example: N, an NHCE, was erroneously excluded from the plan. During the year of exclusion, N made $10,000 in compensation. The average of the deferral percentages for other NHCEs who were provided with the opportunity to make elective deferrals was 5%. N’s missed deferral is estimated to be: 5% times $10,000 or $500. The required corrective contribution on behalf of N, before adjusting for Earnings, is 50% of $500 or $250.)

The total corrective contribution (before adjusting for Earnings) on behalf of the affected NHCEs for each plan year is as follows:

The corrective contribution made on behalf of each affected employee will also be adjusted for Earnings. Earnings will be calculated from the date(s) that the contribution(s) should have been made through the date of the corrective contribution. The corrective contribution (adjusted for Earnings) will be made to each affected employee’s SARSEP IRA account. If an affected employee does not have a SARSEP IRA account, a SARSEP IRA account will be established for that employee. Earnings will be calculated on the basis of one of the following methods (check one):

Actual investment results of the affected employee’s SARSEP IRA account.

The interest rate incorporated in the VFCP Online Calculator, since the actual Earnings of the affected employee’s IRA account cannot be ascertained.

January 22, 2013 410 2013–4 I.R.B.

Plan Name: EIN: Plan #:

Actual investment results for years in which data is available, or the rate incorporated in the VFCP Online Calculator for years in which the actual Earnings of the affected employee’s IRA account cannot be ascertained. The VFCP Online Calculator was or will be used for the following year(s):

Former employees affected by the failure (check one):

There are no former employees affected by the failure.

E. Excess Amounts Contributed

The Plan Sponsor contributed Excess Amounts to the Plan on behalf of participants as follows: (check boxes that apply)

Amounts were contributed in excess of the benefit the participants were entitled to under the plan.

SARSEP only: Elective deferrals were contributed to the SARSEP in excess of the limitation under the terms of the SARSEP ( e.g., the lesser of 25% of compensation or the applicable limit under § 402(g)).

The total of the Excess Amounts for each affected plan year was as follows:

Description of the Proposed Method of Correction (check all correction methods that apply)

Distribution of Excess Elective Deferrals (SARSEPs only)

The Plan Sponsor has effected (or will effect) a corrective distribution of the Excess Amounts, adjusted for Earnings through the date of correction, to the affected participant(s). The Earnings adjustment will be based on the actual rates of return of the participant’s SARSEP IRA account from the date(s) that the excess deferrals were made through the date of correction.

2013–4 I.R.B. 411 January 22, 2013

Plan Name: EIN: Plan #:

Affected participants were (or will be) informed that the corrective distribution of an Excess Amount is not eligible for favorable tax treatment accorded to distributions from a SARSEP and, specifically, is not eligible for tax-free rollover.

The total corrective distribution (before adjusting for Earnings) for each affected year is as follows:

Distribution of Excess Employer Contributions

The Plan Sponsor has effected (or will effect) the return of excess employer contributions, adjusted for Earnings through the date of correction, to the Plan Sponsor. The Earnings adjustment will be based on the actual rates of return of the SEP or SARSEP from the date(s) that the excess employer contributions were made through the date of correction. The amount returned to the Plan Sponsor is not includible in the gross income of the affected participant(s). The Plan Sponsor is not entitled to a deduction for such excess employer contributions. The amount returned is reported on Form 1099-R as a distribution issued to the affected participant(s), indicating the taxable amount as zero.

The amount to be returned to the Plan Sponsor (before adjusting for Earnings) for each affected year is as follows:

Retention of Excess Amounts

Note: If this correction method is selected, an additional VCP fee is required. (See section 12.06(2) of Rev. Proc. 2013–12.)

The Excess Amounts (including Earnings) were retained in the SARSEP or SEP IRA accounts of the affected participants as follows:

January 22, 2013 412 2013–4 I.R.B.

Plan Name: EIN: Plan #:

The Earnings adjustment will be based on the actual rates of return of the SEP or SARSEP from the date(s) that the excess employer contributions were made through the date of correction.

Excess Amounts of $100 or less. (See section 6.02(5)(e) of Rev. Proc. 2013–12.)

For one or more participants, the total Excess Amount (employer contributions and/or elective deferrals before adjusting for Earnings) is $100 or less. The Excess Amount will not be distributed.

SECTION II. CHANGE IN ADMINISTRATIVE PROCEDURES

Please include an explanation of how and why the failures arose and a description of the measures that will be implemented to ensure that the same failures will not recur.

SECTION III. REQUEST(S) FOR EXCISE TAX RELIEF (check applicable boxes)

Excise tax pursuant to § 4979. The Applicant requests that the Service not pursue the excise tax under § 4979. (This applies only to failures to satisfy the nondiscrimination test for elective deferrals. See section 6.09(4) of Rev. Proc. 2013–12 for an example of a situation where a request for relief under § 4979 would be considered. Please enclose a written explanation in support of your request for relief from this excise tax.)

Excise tax pursuant to § 4972. The Applicant requests that the Service not pursue the excise tax under § 4972. (This applies to situations where corrective contributions made in accordance with this submission would be nondeductible contributions for the year of correction and thus would be subject to the excise tax under § 4972. See section 6.09(3) of Rev. Proc. 2013–12. Please enclose a written explanation in support of your request for relief from this excise tax.)

SECTION IV. ENCLOSURES

In addition to the applicable items listed on the Procedural Requirements Checklist for Form 8950, the Plan Sponsor encloses the following with this submission:

The applicable plan document. (This could be an IRS form document, such as a Form 5305-SEP or 5305A-SEP, or a prototype plan document developed by a financial institution. If a prototype plan document is used, include a copy of the most recent favorable opinion letter issued for such plan document).

2013–4 I.R.B. 413 January 22, 2013

Plan Name: EIN: Plan #:

A written explanation of how and why the failure(s) described in this submission occurred, including a description of the administrative procedures applicable to the failure(s) in effect at the time the failure(s) occurred.
For failures that involve corrective contributions or corrective distributions, a description of assumptions and supporting calculations used to determine the amounts needed for correction:

For failures to satisfy the nondiscrimination test for elective deferrals, computations in support of the proposed correction including:

a) The determination of HCEs and NHCEs,

b) The deferral percentages of individual employees and the applicable ADP calculations,

c) The determination of corrective contributions on behalf of NHCEs to correct the ADP test, and

d) Calculations showing how the Earnings adjustment and the ultimate corrective contribution on behalf of affected employees will be determined. (Please use estimates, including an estimated correction date, if corrective distributions have not been made yet.)

For failures to make required employer contributions and for failures to provide eligible employees with the opportunity to make elective deferrals:

a) Computations in support of the corrective contribution amounts attributable to each participant. In the case of a failure to provide eligible employees with the opportunity to make elective deferrals, please include computations showing how the average deferral percentage, missed deferral, and corrective contribution amount was determined.

b) Calculations showing how the Earnings adjustment and the ultimate corrective contribution on behalf of affected employees will be determined.

For failures involving the contribution of Excess Amounts:

a) Computations in support of the excess contribution amounts attributable to each participant; and

b) Calculations showing how the Earnings adjustment and the ultimate corrective distribution amounts are determined. (Please use estimates, including an estimated correction date, if corrective distributions have not been made yet.)

Explanations in support of requests for excise tax relief.
Any other information that would be useful for the purpose of understanding the proposals made under the submission.

January 22, 2013 414 2013–4 I.R.B.

APPENDIX C PART II, SCHEDULE 4

SIMPLE IRAs

Plan Name: EIN: Plan #: (Please include the plan name, Applicant’s EIN, and plan number on each page of the submission, including attachments.)

SECTION I. IDENTIFICATION OF FAILURE(S) AND PROPOSED METHOD(S) OF CORRECTION

The following failure(s) occurred with respect to the SIMPLE IRA Plan identified above: (Check failure(s) that apply. Within each failure, check applicable boxes, and provide the information requested.)

A. Employer Eligibility Failure

The plan was adopted by a Plan Sponsor who was (or subsequently became) ineligible to sponsor a SIMPLE IRA Plan under the requirements of § 408(p) because the Plan Sponsor (and, if applicable, its related controlled group or affiliated service group employers) had more than 100 employees (including leased employees, if applicable) who earned $5,000 or more in compensation during the following plan year(s):

The plan was adopted by a Plan Sponsor who was not eligible to sponsor a SIMPLE IRA Plan under the requirements of § 408(p) because the Plan Sponsor established or maintained a Qualified Plan with respect to which contributions were made (or under which benefits were accrued) during any plan year of the SIMPLE IRA Plan. The failure occurred during the following plan year(s):

Description of the Proposed Method of Correction:

All contributions to the plan ceased as of (insert a date no later than the date this VCP submission is filed with the Service). The Plan Sponsor will not permit any new employer or salary reduction contributions to be made to the plan.

B. Failure to Make Required Employer Contributions

The Plan Sponsor failed to make employer contributions on behalf of eligible employees as required under the terms of the plan.

The failure occurred on account of the erroneous exclusion of eligible employees

Other (describe):

The failure occurred for the following plan years:

For the applicable plan years, the provisions of the plan document required the Plan Sponsor to make employer contributions based on the following formula:

2% nonelective contribution on behalf of each eligible employee who earned at least $5,000 in compensation for the year.

Matching contribution on behalf of each eligible employee equal to deferrals up to 3% of compensation.

Grace period applied. The plan provided for a matching contribution on behalf of each eligible employee equal to deferrals up to % of compensation.

(Note: If the failure occurred for multiple plan years and different employer contribution criteria applied during those years, check the applicable box, and indicate the plan years for which the formula applied.)

2013–4 I.R.B. 415 January 22, 2013

Plan Name: EIN: Plan #:

Description of the Proposed Method of Correction:

The Plan Sponsor has contributed (or will contribute) additional amounts to the plan on behalf of each affected employee. For each affected employee, the corrective contribution will be determined by calculating the contribution the employee would have been entitled to receive under the terms of the plan and subtracting any contributions already made on behalf of the employee for the plan year. The corrective contribution made on behalf of an affected employee will be adjusted for Earnings. Earnings will be calculated from the last day of the plan year for which the failure occurred through the date of the corrective contribution. The corrective contribution (adjusted for Earnings) will be made to each affected employee’s SIMPLE IRA account. If an affected employee does not have a SIMPLE IRA account, an account will be established for that employee.

If the plan did not provide eligible employees with the opportunity to make elective deferrals and the plan provides for matching contributions, the corrective matching contribution will be based on the assumption that the eligible employee would have made an elective deferral equal to 3% of compensation.

The total corrective contribution (before adjusting for Earnings) for each plan year is:

The Earnings calculation for an affected employee will be based on one of the following method(s) (check one):

Actual investment results of the affected employee’s SIMPLE IRA account.

The interest rate incorporated in the Department of Labor’s Voluntary Fiduciary Correction Program Online Calculator (VFCP Online Calculator) ( http://www.dol.gov/ebsa/calculator/main.html ), since the actual Earnings of the affected employee’s IRA account cannot be ascertained.

Actual investment results for years in which data for the affected employee is available, and the rate incorporated in the VFCP Online Calculator for years in which the actual investment results of the affected employee’s IRA account cannot be ascertained. The VFCP Online Calculator was or will be used for the following year(s):

Former employees affected by the failure (check one):

There are no former employees affected by the failure.

Affected former employees (or if deceased, their estate or known beneficiary) will be contacted, and corrective contributions will be made to their SIMPLE IRA accounts. To the extent that an affected former employee or beneficiary cannot be located following a mailing to the last known address, the Plan Sponsor will take the actions specified below to locate that employee or beneficiary:

January 22, 2013 416 2013–4 I.R.B.

Plan Name: EIN: Plan #:

C. Failure to provide eligible employees with the opportunity to make elective deferrals

The Plan Sponsor did not provide employee(s) who satisfied the applicable eligibility requirements with the opportunity to make elective deferrals to the SIMPLE IRA plan. The failure occurred for the following plan year(s):

Description of the Proposed Method of Correction

The Plan Sponsor has contributed (or will contribute) additional amounts to the plan on behalf of each affected employee. The corrective contribution will be made to compensate the affected employee(s) for the missed deferral opportunity. The corrective contribution on behalf of each affected employee is equal to 50% of what the employee’s deferral might have been had he or she been provided with the opportunity to make elective deferrals to the plan. Since the employee’s deferral decision is not known, the deferral amount is estimated by assuming that the excluded employee would have made an elective deferral equal to 3% of his or her compensation. ( Example: N, a nonhighly compensated employee was erroneously excluded from the plan. During the year of exclusion, N made $10,000 in compensation. N’s missed deferral is estimated to be: 3% times $10,000 or $300. The required corrective contribution on behalf of N, before adjusting for Earnings, is 50% of $300 or $150). Thus, the required corrective contribution for an employee who was erroneously excluded from making elective deferrals from a SIMPLE IRA Plan is equal to 1.5% of compensation (adjusted for Earnings).

The total corrective contribution (before adjusting for Earnings) on behalf of the affected employees for each plan year is as follows:

The corrective contribution made on behalf of each affected employee will also be adjusted for Earnings. Earnings will be calculated from the date(s) that the contribution(s) should have been made through the date of the corrective contribution. The corrective contribution (adjusted for Earnings) will be made to each affected employee’s SIMPLE IRA account. If an affected employee does not have a SIMPLE IRA account, a SIMPLE IRA account will be established for that employee. Earnings will be calculated on the basis of one of the following methods (check one):

Actual investment results of the affected employee’s SIMPLE IRA account.

The interest rate incorporated in the VFCP Online Calculator, since the actual Earnings of the affected employee’s IRA account cannot be ascertained.

2013–4 I.R.B. 417 January 22, 2013

Plan Name: EIN: Plan #:

Former employees affected by the failure (check one):

There are no former employees affected by the failure.

After such actions are taken, if an affected employee or beneficiary is not found but is subsequently located on a later date, the Plan Sponsor will make a corrective contribution to the affected SIMPLE IRA account at that time.

D. Excess Amounts Contributed

The Plan Sponsor contributed Excess Amounts to the plan on behalf of participants as follows: (check boxes that apply)

Amounts were contributed in excess of the benefit the participants were entitled to under the plan.

Elective deferrals were made to the SIMPLE IRA in excess of the limitation under the terms of the SIMPLE IRA ( e.g., the applicable limit under § 408(p)(2)(E)).

The total of the Excess Amounts for each affected plan year was as follows:

Description of the Proposed Method of Correction:

(check all correction methods that apply)

Distribution of Excess Elective Deferrals

The Plan Sponsor has effected (or will effect) a distribution of the Excess Amounts, adjusted for Earnings through the date of correction, to the affected participant(s). The Earnings adjustment will be based on the actual rates of return of the participant’s SIMPLE IRA account from the date(s) that the excess deferrals were made through the date of correction.

Affected participants were (or will be) informed that the distribution of an Excess Amount is not eligible for favorable tax treatment accorded to distributions from a SIMPLE IRA and, specifically, is not eligible for tax-free rollover.

January 22, 2013 418 2013–4 I.R.B.

Plan Name: EIN: Plan #:

The total corrective distribution (before adjusting for Earnings) for each affected plan year is as follows:

Distribution of Excess Employer Contributions

The Plan Sponsor has effected (or will effect) the return of excess employer contributions, adjusted for Earnings through the date of correction, to the Plan Sponsor. The Earnings adjustment will be based on the actual rates of return on the affected participants’ SIMPLE IRA accounts from the date(s) that the excess employer contributions were made through the date of correction. The amount returned to the Plan Sponsor is not includible in the gross income of the affected participant(s). The Plan Sponsor is not entitled to a deduction for such excess employer contributions. The amount returned is reported on Form 1099-R as a distribution issued to the affected participant(s), indicating the taxable amount as zero.

The return of the excess employer contributions (before adjusting for Earnings) for each affected plan year is as follows:

Retention of Excess Amounts

Note: If this correction method is selected, an additional VCP fee is required. (See section 12.06(2) of Rev. Proc. 2013–12.)

The Excess Amounts (including Earnings) were retained in the SIMPLE IRA accounts of the affected participants as follows:

2013–4 I.R.B. 419 January 22, 2013

Plan Name: EIN: Plan #:

The Earnings adjustment will be based on the actual rates of return of the SIMPLE IRA from the date(s) that the excess employer contributions were made through the date of correction.

Excess Amounts of $100 or less (See section 6.02(5)(e) of Rev. Proc. 2013–12.)

For one or more participants, the total Excess Amount (employer contributions and/or elective deferrals before adjusting for Earnings) is $100 or less. The Excess Amount will not be distributed.

Former employees affected by the Excess Amounts failure (check one):

There are no former employees affected by the failure.

SECTION II. CHANGE IN ADMINISTRATIVE PROCEDURES

Please include an explanation of how and why the failures arose and a description of the measures that will be implemented to ensure that the same failures will not recur.

SECTION III. REQUEST(S) FOR EXCISE TAX RELIEF (check if applicable)

Excise tax pursuant to § 4972. The Plan Sponsor requests that the Service not pursue the excise tax under § 4972. (This applies to situations where corrective contributions made in accordance with this submission would be nondeductible contributions for the year of correction and subject to the excise tax under § 4972. See section 6.09(3) of Rev. Proc. 2013–12. Please enclose a written explanation in support of your request for relief from this excise tax.)

January 22, 2013 420 2013–4 I.R.B.

Plan Name: EIN: Plan #:

SECTION IV. ENCLOSURES

In addition to the applicable items listed on the Procedural Requirements Checklist for Form 8950, the Plan Sponsor encloses the following with this submission:

The applicable plan document. (This could be an IRS form document, such as a 5305-SIMPLE or 5304 SIMPLE, or a prototype document developed by a financial institution. If a prototype plan document is used, please send a copy of the most recent opinion letter issued with respect to such plan document.)
A written explanation of how and why the failure(s) described in this submission occurred, including a description of the administrative procedures applicable to the failure(s) in effect at the time the failure(s) occurred.
For failures that involve corrective contributions or corrective distributions, a description of assumptions and supporting calculations used to determine the amount needed for correction:

For failures to make required employer contributions and for failures to provide eligible employees with the opportunity to make elective deferrals:

b) Calculations showing how the Earnings adjustment and the ultimate corrective contribution on behalf of affected employees will be determined. (Please use estimates, including an estimated correction date, if corrective contributions have not been made yet.)

For failures involving the contribution of Excess Amounts:

a) Computations in support of the excess contribution amounts attributable to each participant.

Explanations in support of requests for excise tax relief.
Any other information that would be useful for the purpose of understanding the proposals made under the submission.

2013–4 I.R.B. 421 January 22, 2013

APPENDIX C PART II, SCHEDULE 5

Plan Loan Failures (Qualified Plans and 403(b) Plans)

Plan Name: EIN: Plan #: (Please include the plan name, Applicant’s EIN, and plan number on each page of the submission, including attachments.)

The plan identified above did not comply with the requirements of § 72(p)(2) of the Internal Revenue Code. (Note: The conditions of § 72(p)(2) must be satisfied for a participant loan to be exempt from being treated as a distribution to the participant under § 72(p)(1).) The failure occurred for the following reason(s) (check applicable boxes and provide the information requested):

A. The loan(s) exceeded the limit under § 72(p)(2)(A)

B. Loan terms did not satisfy the limits on the duration of the loan under § 72(p)(2)(B)

C. Loan terms did not satisfy § 72(p)(2)(C) relating to the frequency and amortization of payments

January 22, 2013 422 2013–4 I.R.B.

Plan Name: EIN: Plan #:

D. Defaulted loan(s) (where the loan terms satisfied the requirements of § 72(p)(2), but default(s) occurred because loan payments were not made in accordance with the terms of the loan)

SECTION II. ELIGIBILITY FOR USE OF APPENDIX C, SCHEDULE 5

Yes No

A. Is any affected participant either a key employee (as defined in § 416(i)(1)) or an owner-employee (as defined in § 401(c)(3))?

If “Yes,” proceed to Section II B .

If “No,” skip Section II B and proceed to Section II C .

Yes No

B. Is the purpose of this request limited to permitting the Plan Sponsor to report the loan as a deemed distribution in the year of correction instead of the year of the failure?

If “Yes,” complete Section III and then proceed directly to Section IV D . (Sections IV A, B, and C do not apply.)

If “No,” STOP — do NOT use this schedule . Any request for relief should be made by filing a detailed written attachment describing the relief requested and the reasons why such relief should be granted.

Yes No

C. Will correction be completed before the maximum period for repayment of the loan (pursuant to § 72(p)(2)(B)) has expired? (Note: The maximum period is determined from the original date of the loan. Generally, this period is five years from the original date of the loan, except for home loans as described in § 72(p)(2)(B)(ii).)

If ”Yes,” and the Plan Sponsor wants relief from reporting the loan as a deemed distribution, complete Section III and then answer applicable questions in Sections IV A through IV C .

If “No,” complete Section III and then proceed to Section IV D .

SECTION III. EXPLANATION OF HOW AND WHY THE PLAN LOAN FAILURES OCCURRED

2013–4 I.R.B. 423 January 22, 2013

Plan Name: EIN: Plan #:

SECTION IV. DESCRIPTION OF PROPOSED METHOD OF CORRECTION

If the Plan Sponsor is requesting relief from reporting loans as deemed distributions, then complete Sections IV A, B, or C, as applicable.

If the Plan Sponsor is only requesting postponement of reporting loans as deemed distributions on Form 1099-R, then proceed directly to Section IV D.

A. Correction for Loans in Excess of § 72(p)(2)(A):

Any participant affected by this failure will make a corrective repayment to the plan. After repaying the excess of the loan amount over the maximum loan amount under § 72(p)(2)(A) (the “excess loan amount”), the remaining balance of the loan will be repaid over the remaining period of the original loan (not beyond the period permitted under § 72(p)(2)(B), determined from the original date of the loan) in a manner that complies with the frequency and level payment requirements of § 72(p)(2)(C). The excess loan amount that will be repaid by the participant is determined based on how previously made payments have been applied to the loan. The previous loan payments were applied as follows (check applicable box, and complete necessary information):

Prior loan payments were made in accordance with an amortization schedule that complied with the requirements of § 72(p)(2)(B) relating to the terms of the loan and § 72(p)(2)(C) relating to frequency, and level loan payments. For the purpose of determining the excess loan amount and the remaining outstanding amount of the loan to be repaid over the remaining period of the loan, the previously made loan payments will be applied as follows (check box that applies)

Solely to reduce the portion of the loan that did not exceed the maximum loan amount under § 72(p)(2)(A). Result: The corrective repayment would equal the excess loan amount plus interest thereon.
To reduce the excess loan amount to the extent of the interest thereon, with the remainder of the repayments applied to reduce the portion of the loan that did not exceed the maximum loan amount under § 72(p)(2)(A). Result: The corrective repayment would equal the excess loan amount.
Pro rata against the excess loan amount and the maximum loan amount under § 72(p)(2)(A). Result: The corrective repayment would equal the outstanding balance remaining on the excess loan amount on the date that corrective repayment is made.

Prior loan payments were not made in accordance with an amortization schedule that complied with the requirements of § 72(p)(2)(B) or (C):

Methodology for determining the excess loan amount that will be repaid and the remaining outstanding balance of the loan that will be amortized over the remaining period of the loan:

After the corrective repayment is made: (Check one of the two options listed below)

Option 1: The remaining loan balance will be repaid according to the original amortization schedule. (This option is available only if the original amortization schedule would result in the loan being repaid within the maximum period permitted under § 72(p)(2)(B) determined from the original date of the loan.)

January 22, 2013 424 2013–4 I.R.B.

Plan Name: EIN: Plan #:

Option 2: The loan will be reformed to amortize the remaining principal balance as of the date of repayment over the remaining period of the original loan, provided that the recalculated payments over the remaining period comply with the requirements of § 72(p)(2)(B) determined from the original date of the loan.

B. Correction for loans with terms that: (i) provided for a repayment period that exceeded the period permitted under § 72(p)(2)(B) and/or (ii) provided for payments that did not provide for substantially level amortization with payments not less frequently than quarterly, as provided under § 72(p)(2)(C): (check the box that applies)

The loan balance will be reamortized with payments made on a substantially level basis (per § 72(p)(2)(C)), made at least quarterly.

2 The reamortized loan balance will be paid over a remaining period that does not extend beyond five years from the date of the original loan (per § 72(p)(2)(B)).

C. Correction for defaulted loans with terms that complied with the requirements of § 72(p)(2)(A), (B), and (C): (check the box that applies)

A lump sum repayment will be made to the plan in an amount equal to the additional repayments that the affected participant would have made to the plan if there had been no failure to repay the plan, plus interest accrued on the missed repayments.
The outstanding balance of the loan, including accrued interest, will be reamortized over a remaining period that does not extend beyond five years from the date of the original loan.
The Applicant will use a combination of the methods described in #1 and #2 above, as follows:

Determination of Interest Accrued on Missed Repayments : (check the box that applies)

Plan loan rate

Rate of return of investments under plan

Note: This option may only be used if the rate of investment return under the plan equals or exceeds the plan loan rate.

2013–4 I.R.B. 425 January 22, 2013

Plan Name: EIN: Plan #:

The interest rate for missed payments was determined as follows:

The additional unpaid interest ( will be / has been (check one)) paid by the: (check the box that applies)

Plan Sponsor

Affected participants

(Note: Irrespective of the Plan Sponsor’s election to have the affected participants pay the unpaid interest, in accordance with section 6.02(6) of Rev. Proc. 2013–12, the Service may, based on the facts and circumstances, determine that the Plan Sponsor should pay all or a portion of the additional unpaid interest. If the Service makes this determination, the Plan Sponsor will be requested to revise this submission.)

D. Correction for Deemed Distributions (check if applicable)

The Plan Sponsor is not eligible to or will not correct in accordance with Parts IV A through IV C of this Appendix C, Part II Schedule 5. The Plan Sponsor proposes that the loans be reported as deemed distributions (using Form 1099 R) for the year of correction instead of the year of the failure. The Plan Sponsor shall pay any applicable income tax withholding amount that was required to be paid in connection with the failure. (See Income Tax Regulations § 1.72(p)–1, Q&A-15)

SECTION V. DESCRIPTION OF STEPS TAKEN TO ENSURE THAT THE FAILURE DOES NOT RECUR

SECTION VI. REQUEST FOR RELIEF

Yes No

The Plan Sponsor requests relief from reporting participant loans as deemed distributions.

The Plan Sponsor requests that the plan be permitted to report the participant loans as deemed distributions in the year of correction instead of the year of the failure.

January 22, 2013 426 2013–4 I.R.B.

Plan Name: EIN: Plan #:

SECTION VII. ENCLOSURES

In addition to the applicable items listed on the Procedural Requirements Checklist for Form 8950, the Plan Sponsor encloses the following with this submission:

Loan amortization schedules for affected participants. (A sample representation may be provided if there are multiple participants affected.)
Specific calculations for each affected employee or a representative sample of affected employees. (The sample calculations must be sufficient to demonstrate each aspect of the correction method proposed ( e.g., for a failure with respect to a loan that exceeds the maximum amount permitted by § 72(p)(2)(A), the calculations must include the amounts of the excess loan amounts that will be repaid to the plan, determination of the outstanding loan balance, and the proposed method of repayment of the outstanding loan balance; for the correction of a defaulted loan, the enclosure should set forth the periods of such loan defaults.)

2013–4 I.R.B. 427 January 22, 2013

APPENDIX C PART II, SCHEDULE 6 Employer Eligibility Failure (§ 401(k) and 403(b) Plans only)

Plan Name: EIN: Plan #: (Please include the plan name, Applicant’s EIN, and plan number on each page of the submission, including attachments.)

SECTION I. IDENTIFICATION OF FAILURE

The following failure occurred with respect to the plan identified above (check failure that applies)

403(b) Plans

The plan was intended to satisfy the requirements of § 403(b) but was adopted by a Plan Sponsor that was not a tax-exempt organization described in § 501(c)(3) or a public educational organization described in § 170(b)(1)(A)(ii).

The type of organization sponsoring the Plan during the period of the failure was:

The failure occurred during the following plan year(s):

Section 401(k) Plans

The plan was intended to include a qualified cash or deferred arrangement and satisfy the requirements of §§ 401(a) and 401(k) but was adopted by an employer that failed to meet the eligibility requirements to establish a § 401(k) Plan.

Describe why the employer was ineligible to maintain the § 401(k) plan:

SECTION II. DESCRIPTION OF PROPOSED METHOD OF CORRECTION

Section 403(b) Plans

All contributions under the plan ceased as of . (Insert date beginning no later than the date the VCP submission was filed with the Service.)
No new employee or employer contributions will be permitted in the future.
The assets in the plan will remain in the trust, annuity contract, or custodial account and will be distributed no earlier than the occurrence of one of the permitted events under § 403(b)(7) or § 403(b)(11).

Section 401(k) Plans

All contributions under the plan ceased as of . (Insert date beginning no later than the date the VCP submission was filed with the Service.)
No new employee or employer contributions will be permitted in the future.
The assets in the plan will remain in the trust, annuity contract, or custodial account and will be distributed no earlier than the occurrence of one of the permitted events under § 401(k).

January 22, 2013 428 2013–4 I.R.B.

Plan Name: EIN: Plan #:

SECTION III. CHANGE IN ADMINISTRATIVE PROCEDURES

Please include an explanation of how and why the failures arose and a description of the measures that will be implemented to ensure that the same failures will not recur.

2013–4 I.R.B. 429 January 22, 2013

APPENDIX C PART II, SCHEDULE 7 Failure to Distribute Elective Deferrals in Excess of the § 402(g) Limit

Plan Name: EIN: Plan #: (Please include the plan name, Applicant’s EIN, and plan number on each page of the submission, including attachments.)

SECTION I. IDENTIFICATION OF FAILURE

SECTION II. DESCRIPTION OF THE PROPOSED METHOD OF CORRECTION

The plan will distribute the excess deferral to the employee(s) and report the amount as taxable in the year of deferral and in the year distributed. In accordance with Income Tax Regulations § 1.402(g)–1(e)(1)(ii), a distribution to a highly compensated employee is included in the Average Deferral Percentage (ADP) test; however, a distribution to a nonhighly compensated employee is not included in the ADP test.

For any distributions attributable to elective deferrals designated as Roth Contributions, all distributions will be reported as taxable in the year distributed. Designated Roth contributions will have already been included in income in the year of deferral.

The excess deferral to be distributed will also be adjusted for Earnings. Earnings will be determined from the end of the year in which the failure occurred through the year of correction. Earnings will be included in the distribution amount that is to be reported as taxable in the year of distribution.

SECTION III. CHANGE IN ADMINISTRATIVE PROCEDURES

Please include an explanation of how and why the failures arose and a description of the measures that will be implemented to ensure that the same failures will not recur.

January 22, 2013 430 2013–4 I.R.B.

Plan Name: EIN: Plan #:

SECTION IV. ENCLOSURES

In addition to the applicable items listed on the Procedural Requirements Checklist for Form 8950, the Plan Sponsor encloses the following with this submission:

Specific calculations for each affected employee or a representative sample of affected employees. (The sample calculations must be sufficient to demonstrate each aspect of the correction method proposed.)

2013–4 I.R.B. 431 January 22, 2013

APPENDIX C PART II, SCHEDULE 8 Failure to Pay Required Minimum Distributions Timely under § 401(a)(9)

Plan Name: EIN: Plan #: (Please include the plan name, Applicant’s EIN, and plan number on each page of the submission, including attachments.)

SECTION I. IDENTIFICATION OF FAILURE

SECTION II. DESCRIPTION OF THE PROPOSED METHOD OF CORRECTION

Defined Contribution plan only - The plan will distribute the required minimum distributions (with Earnings from the date of the failure to the date of distribution) to affected participants. For each affected participant, the amount to be distributed for each year in which the failure occurred will be determined by dividing the adjusted account balance on the applicable valuation date by the applicable distribution period. For this purpose, adjusted account balance means the actual account balance, determined in accordance with § 1.401(a)(9)–5 Q&A-3 of the Income Tax Regulations, reduced by the amount of the total missed minimum distributions for prior years.

Defined Benefit plan only - The plan will distribute the required minimum distributions plus an interest payment representing the loss of use of such amounts. The interest adjustment is determined as follows:

SECTION III. REQUEST FOR RELIEF

A. The Applicant requests relief with regard to excise taxes under § 4974

Yes No

At least one affected participant is either an owner-employee (see § 401(c)(3)) or, if the Plan Sponsor is a corporation, a 10 percent owner of such corporation.

January 22, 2013 432 2013–4 I.R.B.

Plan Name: EIN: Plan #:

If “Yes,” the Applicant submits the following explanation for its request for relief from the § 4974 excise tax:

SECTION IV. CHANGE IN ADMINISTRATIVE PROCEDURES

Please include an explanation of how and why the failures arose and a description of the measures that will be implemented to ensure that the same failures will not recur.

SECTION V. ENCLOSURES

In addition to the applicable items listed on the Procedural Requirements Checklist for Form 8950, the Plan Sponsor encloses the following with this submission:

Specific calculations for each affected employee or a representative sample of affected employees. (The sample calculations must be sufficient to demonstrate each aspect of the correction method proposed. For a defined benefit plan, these specific calculations must illustrate the interest rate used to represent the loss of the use of the missed required minimum distributions.)

2013–4 I.R.B. 433 January 22, 2013

APPENDIX C PART II, SCHEDULE 9 Correction by Plan Amendment (in accordance with Appendix B)

Plan Name: EIN: Plan #: (Please include the plan name, Applicant’s EIN, and plan number on each page of the submission, including attachments.)

SECTION I. IDENTIFICATION OF FAILURE(S) AND PROPOSED METHOD(S) OF CORRECTION

The following failure(s) occurred with respect to the plan identified above (check failure(s) that apply)

A. § 401(a)(17) Failure in a Defined Contribution Plan (check as applicable)

Contributions

Forfeitures were allocated on the basis of compensation in excess of the limit under § 401(a)(17) as provided below:

Enter the plan years in which the failure occurred, the amount of the allocations in excess of § 401(a)(17) made for each plan year (including Earnings), and the number of participants affected by the failure for each plan year:

Description of Proposed Method of Correction:

An additional amount has been (or will be) contributed to the plan on behalf of each of the employees who received an allocation for the year of the failure (excluding each employee for whom there was a § 401(a)(17) failure). The amount contributed for an employee is equal to the employee’s plan compensation for the year of the failure multiplied by a fraction, the numerator of which is the improperly allocated amount made on behalf of the employee with the largest improperly allocated amount, and the denominator of which is the limit under § 401(a)(17) applicable to the year of the failure. In addition, the plan will be retroactively amended to reflect the increased contribution and allocation percentages for the plan’s participants.

Enter the plan years in which the failure occurred, the fraction used to determine the additional amount allocated to employees other than those for whom there was a § 401(a)(17) failure, and the total required contribution (before adjusting for Earnings) for each plan year in which the failure occurred:

January 22, 2013 434 2013–4 I.R.B.

Plan Name: EIN: Plan #:

The resulting additional amount will be adjusted for Earnings from the end of the plan year in which the failure occurred through the date of the corrective contribution. The method for determining the Earnings adjustment is as follows:

Former employees affected by the failure (check one):

There are no former employees affected by the failure.

Affected former employees (or if deceased, their estate or known beneficiary) will be contacted and contributions will be made to the plan on their behalf. To the extent that an affected former employee or beneficiary cannot be located following a mailing to the last known address, the Plan Sponsor will take the actions specified below to locate that employee or beneficiary:

B. Hardship Distribution Failure

Hardship distributions were made to participants under the plan. All plan participants were entitled to request hardship distributions, and all requests were evaluated in accordance with uniform eligibility standards, as described below:

2013–4 I.R.B. 435 January 22, 2013

Plan Name: EIN: Plan #:

Enter the plan years in which the failure occurred, the number of hardship distributions made for each plan year, and the number and amount of distributions made to highly compensated employees (HCEs) and nonhighly compensated employees (NHCEs) respectively, affected by the failure for each plan year.

Description of the Proposed Method of Correction:

The failure was (or will be) corrected by retroactively amending the plan to provide for the hardship distributions that were made available. The effective date of the corrective amendment is:

C. Plan Loan Failure

Plan loans were made to participants under the plan. All plan participants were entitled to request plan loans under uniform standards of eligibility, and all plan loans made satisfied the requirements of § 72(p).

Enter the plan years in which the failure occurred, the number of participant plan loans made for each plan year, and the number and amount of plan loans made to highly compensated employees (HCEs) and nonhighly compensated employees (NHCEs) respectively, affected by the failure for each plan year.

Description of the Proposed Method of Correction:

The failure was (or will be) corrected by retroactively amending the plan to provide for the plan loans that were made available. The effective date of the corrective amendment is:

D. Early Inclusion of Otherwise Eligible Employee Failure

Employees:

(check applicable boxes)

January 22, 2013 436 2013–4 I.R.B.

Plan Name: EIN: Plan #:

Who had not satisfied the plan’s minimum age or service requirements were treated as eligible participants on a date prior to their being eligible under the plan and were entitled to the same benefits under the plan to which they would have been entitled had they completed the minimum age or service requirements of the plan.

Who had completed the plan’s minimum age or service requirements were treated as eligible participants prior to the applicable plan entry date and were entitled to the same benefits under the plan to which they would have been entitled had they entered the plan timely.

The plan’s minimum age or service requirements and plan entry date, as applicable, for the years of the failure were as follows:

Enter the plan years in which the failure occurred and the number of participants affected by the failure, broken down by type of employee (highly compensated employee (HCE) or nonhighly compensated employee (NHCE) respectively, for each plan year.

Description of the Proposed Correction Method:

The failure was (or will be) corrected by retroactively amending the plan to provide for the inclusion of the ineligible employees. The effective date of the corrective amendment is:

SECTION II. CHANGE IN ADMINISTRATIVE PROCEDURES

Please include an explanation of how and why the failures arose and a description of the measures that will be implemented to ensure that the same failures will not recur.

2013–4 I.R.B. 437 January 22, 2013

Plan Name: EIN: Plan #:

SECTION III. ENCLOSURES

In addition to the applicable items listed on the Procedural Requirements Checklist for Form 8950, the Plan Sponsor encloses the following with this submission:

Copies of all amendments used to correct the failure(s), either as adopted or in proposed form. ( required )
A copy of the plan document in effect prior to any of the amendments used to correct the failure(s). ( required )
For a § 401(a)(17) failure in a defined contribution plan, specific calculations for each affected employee or a representative sample of affected employees. (The sample calculations must be sufficient to demonstrate each aspect of the correction method proposed. For example, the determination of the fraction used to determine the additional amount to be allocated to each employee (other than those for whom there was a § 401(a)(17) failure) must be demonstrated.)

January 22, 2013 438 2013–4 I.R.B.

APPENDIX D ACKNOWLEDGEMENT LETTER

[ ] [INSERT NAME AND

[ ] ADDRESS OF PLAN

[ ] SPONSOR OR

[ ] AUTHORIZED REPRESENTATIVE

[ ] AT LEFT]

Applicant’s Name:

Plan Name:

[insert plan name]

Plan No.

[insert plan number]

Control No.:

(to be completed by IRS)

Received Date:

(to be completed by IRS)

The Internal Revenue Service, Employee Plans Voluntary Compliance, has received your VCP submission for the above-captioned plan. Your request has been assigned the control number listed above. This number should be referred to in any communication to us concerning your submission. If a determination letter application was included with your VCP submission, any acknowledgement letter issued by the Service with regard to such application will be mailed to you under separate cover.

You will be contacted when the VCP case is assigned to an agent. If you need to inquire about the status of your case prior to that date, please call (626) 312–4921 (not a toll-free number). Please leave a message with the name of the plan, the Control Number, your name, and a phone number where you can be reached.

Thank you.

2013–4 I.R.B. 439 January 22, 2013