SECTION 11. SUBMISSION — Internal Revenue Bulletin 2016-42

PROCEDURES FOR VCP

.01 General rules . (1) A VCP submission must satisfy the requirements of this section 11.

(2) A VCP submission must include completed Forms 8950 and 8951.

(3) A VCP submission must include a description of the failures, a description of the proposed methods of correction, and other procedural items set forth in this section 11.

.02 Use of model forms . (1) Schedules 1 through 9 (Forms 14568–A through 14568–I) provide descriptions of common qualification failures and standardized correction methods that may be submitted in lieu of individually drafted descriptions. For applicants that do not choose to use the Form 14568, the schedules can be used to satisfy certain requirements of this revenue procedure.

(2) Multiple schedules may be included in a single VCP submission.

(3) A schedule may be used only if its printed content applies without modification to the applicant’s situation.

(4) Applicants may use the current versions of Form 14568 and Forms 14568–A through 14568–I, which are available on the IRS website (https://www.irs.gov/ retirement-plans/correcting-plan-errorsfill-in-vcp-submission-documents). The IRS reserves the right to modify the Form

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14568 series to improve usability, reflect changes in law, or create additional schedules by adding new forms to the Form 14568 series. .03 Submission requirements . A VCP submission must include the following information:

(1) Identification of failures . A complete description of the failures, the years in which the failures occurred, including closed years (that is, years for which the statutory period has expired), and the number of employees affected by each failure.

(2) Explanation . An explanation of how and why the failures arose, including a description of the administrative procedures applicable to the failures in effect at the time the failures occurred.

(3) Proposed method of correction . A detailed description of the method for correcting the failures that the Plan Sponsor has implemented or proposes to implement. Each step of the correction method must be described in narrative form. The description must include the specific information needed to support the proposed correction method. This information includes, for example, the number of employees affected and the expected cost of correction (both of which may be approximated if the exact number cannot be determined at the time of the request), the years involved, and calculations or assumptions the Plan Sponsor used to determine the amounts needed for correction.

(4) Earnings or actuarial adjustments . A description of the methodology that will be used to calculate Earnings or actuarial adjustments on any corrective contributions or distributions (indicating the computation periods and the basis for determining Earnings or actuarial adjustments, in accordance with section 6.02(4)).

(5) Computations . 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, if a Plan Sponsor requests a compliance statement with respect to a failure to satisfy the contribution limits of § 415(c) and proposes a correction method that involves elective deferrals (whether matched or unmatched) and matching contributions, the Plan Sponsor must submit calculations il

lustrating the correction method proposed with respect to each type of contribution. As another example, with respect to a failure to satisfy the ADP test in § 401(k)(3), the Plan Sponsor must submit the ADP test results both before the correction and after the correction.

(6) Former employees or beneficiaries . The method(s) that will be used to locate and notify former employees and beneficiaries, or an affirmative statement that no former employees or beneficiaries were affected by the failures or will be affected by the correction.

(7) Change in administrative proce- dures . A description of the measures that have been or will be implemented to ensure that the same failures will not recur.

(8) Request for excise tax relief (§ 4972, 4973, 4974, or 4979) or addi- tional tax relief under § 72(t) . If excise tax or additional tax relief is sought, a specific request for relief should be included in the submission, along with explanations, where applicable, supporting such request.

(9) Loan failures and income tax re- porting relief . A specific request for relief needs to be made if the applicant either wants relief from reporting a corrected participant loan as a deemed distribution or wants to report the loan as a deemed distribution in the year of correction instead of the year in which the deemed distribution occurred.

(10) Transferred Assets . If a submission includes a failure that relates to Transferred Assets and the failure occurred prior to the transfer, a description of the transaction (including the dates of the employer change and the plan transfer).

(11) 403(b) Plans . In the case of a 403(b) Plan submission, a statement that the Plan Sponsor has contacted all other entities involved with the plan and has been assured of cooperation in implementing the applicable correction, to the extent necessary. For example, if the plan’s failure is the failure to satisfy the requirements of § 403(b)(1)(E) regarding elective deferrals, the Plan Sponsor must, prior to making the VCP submission, contact the insurance company or custodian with control over the plan’s assets to assure cooperation in effecting a distribution of the excess deferrals ad

justed for Earnings thereon. A submission under VCP must also contain a statement as to the type of employer (for example, a tax-exempt organization described in § 501(c)(3)) that is making the VCP submission.

(12) Group Submissions . A Group Submission must be signed by the Eligible Organization or the Eligible Organization’s authorized representative and accompanied by a copy of the relevant portions of the plan document(s).

(13) Orphan Plans . If the plan is an Orphan Plan, the applicant should indicate whether relief from correction or from the user fee is being requested and the support for such relief. See sections 4.08 and 6.02(5)(f). .04 Required documents . A VCP submission must be accompanied by the following documents:

(1) Forms 8950 and 8951 . Forms 8950 and 8951 must be included with a VCP submission.

(2) Plan document . A copy of the entire plan document or the relevant portions of the plan document. For example, in a case involving an improper exclusion of eligible employees from a profit-sharing plan with a cash or deferred arrangement, relevant portions of the plan document include the eligibility, allocation, and cash or deferred arrangement provisions of the basic plan document (and the adoption agreement, if applicable), along with applicable definitions in the plan. In the case of a SEP and a SIMPLE IRA Plan, the entire plan document should be submitted.

.05 Date user fee due generally . Except as provided in sections 4.08 and 11.06, the user fee described under the annual revenue procedure that sets forth user fees (including VCP user fees), must be included with the submission. The user fee must be paid by check made payable to the United States Treasury. Include a photocopy of the check with the submission. If the appropriate user fee is not included in the submission, the submission may be returned.

.06 Additional amount due for SEPs, SIMPLE IRA Plans, and Group Submis- sions . In the case of a SEP, a SIMPLE IRA Plan, or a Group Submission, the initial user fee (described in the annual revenue procedure that sets forth user fees, including VCP user fees) must be

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included in the submission and any additional amount is due at the time the compliance statement is signed by the Plan Sponsor and returned to the IRS, or when agreement has been reached between the IRS and the Plan Sponsor regarding correction of the failure(s).

.07 Power of attorney requirements . To appear before the IRS in connection with the submission, the Plan Sponsor’s representative must comply with the requirements of section 9.02(11) and (12) of Rev. Proc. 2016–4, 2016–1 I.R.B. 142, as updated annually, and submit Form 2848. A Form 2848 that designates a representative not qualified to sign Part II of the Form 2848, for example, an unenrolled return preparer, will not be accepted. However, a Plan Sponsor may authorize an individual, such as an unenrolled return preparer, to inspect or receive confidential information using Form 8821, Tax Infor- mation Authorization . (See Form 8821 and Instructions) See section 10.09 for special rules relating to Anonymous Submissions.

.08 Penalty of perjury statement . (1) The Plan Sponsor must sign the penalty of perjury statement on the Form 8950 as part of a VCP submission. In addition, the following declaration must accompany any new factual information or change in the VCP submission made at a later time: “Under penalties of perjury, I declare that I have examined this submission, including accompanying documents, and, to the best of my knowledge and belief, the facts presented in support of this submission are true, correct, and complete.” The declaration must be signed by the Plan Sponsor, not the Plan Sponsor’s representative.

(2) If the VCP submission is an Anonymous Submission made pursuant to section 10.09, and the submission is made by an individual authorized to represent the Plan Sponsor, the individual must submit the following statement: “Under penal- ties of perjury, I declare that I am an authorized representative of the Plan Sponsor who complies with the Power of Attorney requirements described in section 11.07 of Revenue Procedure 2016–51. I will submit an executed Form 2848 upon the disclosure of the identity of the Plan Sponsor to the IRS.”

.09 Procedural Requirements Check- list . The IRS will be able to respond more quickly to a VCP submission if the submission is carefully prepared and complete. The checklist provided on Form 8950 and the instructions to Forms 8950 and 8951 are designed to assist Plan Sponsors and their representatives in preparing the information and documents required under this revenue procedure.

.10 Orphan Plan . The VCP submission should indicate, if applicable, that it concerns an Orphan Plan and should include information that establishes that the applicant is an Eligible Party, as defined in section 5.03(2).

.11 Acknowledgement letter . The IRS will acknowledge receipt of a VCP submission (or non-VCP submission for a § 457(b) plan, as permitted by section 4.09) only if the Plan Sponsor or the Plan Sponsor’s representative completes IRS Letter 5265 and includes it in the submission. A separate Letter 5265 should be included for each plan submitted.

.12 VCP mailing addresses . Use the following addresses for VCP submissions:

First class mail :

Internal Revenue Service P.O. Box 12192 Covington, KY 41012-0192 Express mail or private delivery service :

Internal Revenue Service 201 West Rivercenter Blvd. Attn: Extracting Stop 312 Covington, KY 41011 .13 Maintenance of copies of submis- sions . Plan Sponsors and their representatives should maintain copies of all correspondence submitted to the IRS with respect to their VCP submissions.

.14 Assembling the submission . (1) The documents comprising a VCP submission must be mailed to the IRS in a single package.

(2) The IRS will be able to process a VCP submission more quickly if it is assembled in the following order:

Form 8951, with the check for the user fee attached to the front of the form. Include a photocopy of the check.
Signed Form 8950.
Power of Attorney (Form 2848) or Tax Information Authorization (Form

attached to Form 8950.

The following narrative information:

Description of the failures (if the failures relate to Transferred Assets, include a description of the related employer transaction).
An explanation of how and why the failures occurred.
Description of the method for correcting failures, including Earnings methodology (if applicable) and supporting computations (if applicable).
Description of the method(s) used to locate or notify former employees or beneficiaries affected by the failures or corrections. If no former employees or beneficiaries are affected by the failures or corrections, then affirmatively state that position when addressing this issue.
Description of the administrative procedures that have been or will be implemented to ensure that the failures do not recur.
Whether a request is being made in order for participant loans corrected under this revenue procedure to not be treated as deemed distributions under § 72(p) and the supporting rationale for such request. Alternatively, whether a request is being made for participant loans corrected under this revenue procedure to be treated as deemed distributions under § 72(p) in the year of correction.
Whether relief is being requested from imposition of the excise taxes under § 4972, 4973, 4974, or 4979, or the 10% additional income tax under § 72(t), and the supporting rationale for such relief.
If the plan is an Orphan Plan, whether relief from the user fee is being requested on Form 8951, and the supporting rationale for such relief.

If the VCP submission includes either Form 14568 or any schedule (Forms 14568–A through 14568–I) include any required information and enclosures, and any related schedules.
Letter 5265.
Copy of opinion, advisory or determination letter (if applicable).
Relevant plan document language or plan document (if applicable).
Any other items that may be relevant to the VCP submission.

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