Form 8951 Compliance Fee for Application for Voluntary Correction

Employee Plans Compliance Resolution System (R.P. 2015-27, R.P. 2015-28) - including Forms 8950, 8951, 14568, 14568-A thru I

Form & Instr 8951 2013

Form 8951--Compliance Fee for Employee Plans Voluntary Correction Program

OMB: 1545-1673

Document [pdf]
Download: pdf | pdf
Form

8951

Compliance Fee for Application for Voluntary
Correction Program (VCP)

(Rev. January 2013)

Under the Employee Plans Compliance Resolution System (EPCRS)
▶

Information about Form 8951 and its instructions is at www.irs.gov/form8951.
▶ Attach to Form 8950.

Department of the Treasury
Internal Revenue Service
1 Name of plan sponsor (employer if single-employer plan)
2 Plan sponsor’s employer identification number

3 Plan number

OMB No. 1545–1673
For IRS Use Only
Amount paid
$

4 Plan name

5 Number of plan participants. See instructions to determine this number.

6 If you are submitting a check for an additional VCP compliance fee that has been requested by an IRS employee in Voluntary Compliance,
check this box
and provide the check amount $
and the VCP Case Number
.
7

General Compliance Fee Schedule
Number of Plan Participants

General Compliance Fee Amount

(a) 0-20

$750

(b) 21-50

$1,000

(c) 51-100

$2,500

(d) 101-500

$5,000

(e) 501-1,000

$8,000

(f) 1,001-5,000

$15,000

(g) 5,001-10,000

$20,000

$25,000
(h) Over 10,000
8
Exceptions to the General Compliance Fee Schedule. Check all boxes that apply:
If a VCP submission consists solely of one or more applicable failures checked in 8(a) - (f) (and does not include any other failure), the
compliance fee will be the lesser of: (1) the sum of the reduced compliance fee amounts, or (2) the general compliance fee amount
(see instructions). If any box in 8(g) - (j) is checked, pay only the corresponding reduced compliance fee amount.
Reduced Compliance Fee Amount
Reduced Compliance Fee Eligibility
(a) VCP submission relates to certain failures involving the late adoption of
good faith amendments, interim amendments, or amendments required to
$375
implement optional tax law changes, as described in Rev. Proc. 2013-12,
section 6.05(3)(a). See Rev. Proc. 2013-12, section 12.03(2).
(b) VCP submission relates to late nonamender failures described in
General compliance fee amount from line 7 is
Rev. Proc. 2013-12, section 6.05(2)(a)(ii), and the VCP submission is made
reduced by 50%.
within a 1-year period following the expiration of the plan's remedial
amendment period for complying with such changes. See Rev. Proc.
2013-12, section 12.03(1).
(c) VCP submission relates to a failure to comply with Internal Revenue Code
(IRC) section 401(a)(9) minimum distribution rules affecting 50 or fewer plan
$500
participants. See Rev. Proc. 2013-12, section 12.02(2), for additional rules.
(d) VCP submission relates to a failure of participant loans to comply with
IRC section 72(p)(2) rules, provided no more than 25% of plan participants
were affected in any year in which the failure occurred. See Rev. Proc.
2013-12, section 12.02(3), for additional rules.
For Paperwork Reduction Act Notice, see instructions.

General compliance fee amount from line 7 is
reduced by 50%.

Cat. No. 37771W

Form 8951 (Rev. 1-2013)

Page 2

Form 8951 (Rev. 1-2013)

Exceptions to the General Compliance Fee Schedule. Check all boxes that apply, continued

If a VCP submission consists solely of one or more applicable failures checked in 8(a) - (f) (and does not include any other failure), the compliance fee
will be the lesser of: (1) the sum of the reduced compliance fee amounts, or (2) the general compliance fee amount (see instructions). If any box in 8(g) (j) is checked, pay only the corresponding reduced compliance fee amount.

Reduced Compliance Fee Eligibility
(e) VCP submission relates to a failure to timely adopt an amendment (upon
which a favorable determination letter is conditioned) within the applicable
remedial amendment period, provided the required amendment is adopted
within three months of the expiration of the remedial amendment period for
adopting the amendment. See Rev. Proc. 2013-12, sections 6.05(3)(d) and
12.03(3), for additional details and conditions.
(f) VCP submission relates to a failure to timely adopt a written 403(b) plan.
The VCP submission must be mailed to the IRS by December 31, 2013. See
Rev. Proc. 2013-12, section 12.02(5) for additional details and conditions.
(g) VCP submission relates to a request for a minor modification of a
previously issued compliance statement, and has been mailed within the
correction period set forth in the compliance statement. See Rev. Proc.
2013-12, section 10.07(10).
(h) Plan is a SEP, SARSEP, or SIMPLE IRA. See Rev. Proc. 2013-12, section
12.06, for additional rules.
(i) Group submission from an eligible organization, as defined in Rev. Proc.
2013-12, section 10.11(2). See Rev. Proc. 2013-12, section 12.05, for
additional
rules.

Reduced Compliance Fee Amount
$500

General compliance fee amount from line 7 is
reduced by 50%.

Compliance fee amount is the lesser of: 50%
of the original compliance fee or $1,500.

$250
Initial fee due with this submission is $10,000.
An additional fee will be requested by the IRS
at a later time based on the number of plans in
excess of 20 that will be part of the group
submission (capped at $50,000).

(j) Terminating orphan plan, as defined in Rev. Proc. 2013-12, section 5.03. A
No compliance fee is due at this time.
terminating orphan plan may be granted a waiver of the fee upon request.
See instructions and Rev. Proc. 2013-12, sections 11.03(13) and 12.02(4).
Caution. In some situations, the compliance fee owed for a VCP submission may be higher than the amounts reflected on pages 1
and 2 of this form. See Determining the Proper Compliance Fee in the instructions and in Rev. Proc. 2013-12, section 12.

Page 3

Form 8951 (Rev. 1-2013)

Section references are to Rev. Proc.
2013-12, unless otherwise noted.

IRS.gov
For the latest information about Form
8951 and its instructions, search “About
Form 8951” on IRS.gov or go directly to
www.irs.gov/form8951.

General Instructions
Purpose of Form
Generally, a compliance fee is required
with each Voluntary Correction Program
(VCP) submission. Use Form 8951 to
determine and submit the applicable
compliance fee for the VCP submission.
Compliance fees are shown on pages 1
and 2 (see section 12).

Where To File
Include Form 8951 and the compliance
fee with your VCP submission.
Send the documents to:
Internal Revenue Service
P.O. Box 12192
Covington, KY 41012-0192
VCP submissions shipped by express
mail or a delivery service should be sent
to:
Internal Revenue Service
201 West Rivercenter Blvd
Attn: Extracting Stop 312
Covington, KY 41011

Payment of Compliance Fee
Generally, unless your submission is for
a terminating orphan plan, as defined in
section 5.03, a compliance fee is due.
Attach a check to Form 8951 payable
to “United States Treasury” for the full
amount of the compliance fee. If you do
not include the full amount of the
compliance fee, your application may be
returned. In addition, include a
photocopy of the check with your
application (see sections 11.05 and
12.09).
If you have multiple plans (for example
a profit-sharing and a money purchase
plan), submit a separate VCP submission
(including a separate Form 8951) for
each plan. Submit a separate check,
including a photocopy of the check, for
each VCP submission.
Your check may be converted to an
electronic fund transfer. An electronic
fund transfer is the process by which the
IRS electronically instructs your financial
institution to transfer funds from your
account to the Treasury's account,
rather than processing your check. By
sending your completed, signed check
to the IRS, you authorize the IRS to copy
your check and to use the account
information from your check to make an
electronic fund transfer from your
account for the same amount as the

check. If the electronic fund transfer
cannot be processed for technical
reasons, you authorize the IRS to
process the copy of your check. The
electronic fund transfer from your
account will usually occur within 24
hours, which is faster than a check is
normally processed, so it is important
that you have sufficient funds available in
your checking account when you send
the IRS your check. Your financial
institution will not return your cancelled
check to you.

Specific Instructions
Lines 1-5
Lines 1 through 5 should correspond to
the information you entered for line 1a,
1g, 4b, 4a, and 4e, respectively, on the
related Form 8950, Application for
Voluntary Correction Program (VCP)
under the Employee Plans Compliance
Resolution System (EPCRS).

Compliance Fee
Line 7
The chart on line 7 is the general
compliance fee schedule that applies to
VCP submissions involving qualified
plans and 403(b) plans (see section
12.02). Reduced compliance fee
amounts are listed on lines 8(g)-(j) for
VCP submissions that involve: SEP,
SIMPLE IRA or SARSEP retirement
plans; group submissions; terminating
orphan plans; and minor modifications of
a previously issued compliance
statement.

Lines 8(a)-(f)
Lines 8(a)-(f) also include reduced
compliance fee amounts if the
submission for a qualified plan or 403(b)
plan is limited to certain specified
failures. In some cases, the compliance
fee for qualified plans and 403(b) plans
will be the lesser of the general
compliance fee amount specified on line
7 or the sum of the applicable reduced
fee amounts specified on line 8. See
Determining the Proper Compliance Fee
next, and section 12.

Determining the Proper
Compliance Fee
Step 1: On line 5, enter the total
number of plan participants recorded on
line 6(f) of the retirement plan’s most
recently filed Form 5500 return. Filers of
Form 5500-SF or EZ will use the
equivalent line item specified on their
forms which is line 5b. For applicants
that are exempt from filing a Form 5500
series return, enter the number of plan
participants determined as of the last
day of the most recently ended plan
year. However, if this information is not
available at the time the VCP submission
is being mailed to the IRS, it is

acceptable to use the most recently
ended prior plan year for which
information on the number of plan
participants is available. The exception
does not apply if the VCP submission is
mailed to the IRS more than seven
months after the close of the most
recently ended plan year preceding the
date of the VCP submission. Plans that
have terminated and filed a final Form
5500 series return should enter the
number of participants on the return filed
for the year prior to the year all assets
were distributed (see section 12.08).
Your entry should correspond to the
information on Form 8950, line 4e.
Step 2 (for single employer plans):
For those VCP submissions that do not
qualify for any of the reduced
compliance fee amounts on line 8, the
amount of the general compliance fee is
determined by checking one of the
boxes on line 7 based on the number of
participants reported on line 5. The
general compliance fee is based on the
number of plan participants (see section
12.02(1)).
Step 2 (for multiemployer or multiple
employer plans): If a submission relates
to a multiemployer or multiple employer
plan, the general compliance fee will
normally be determined in accordance
with the instructions in Step 1 and in the
first paragraph of this Step 2. However, if
all of the described failures in the
submission apply to fewer than all of the
employers under the plan, the plan
administrator may choose to have the
general compliance fee computed
separately for each affected employer
based on the participants attributable to
that employer rather than the total
participants of the entire plan. This
applies when the plan administrator
believes each failure is attributable in
whole or in part to data, information,
actions, or inactions that are within the
control of the employers rather than the
multiemployer or multiple employer plan
(such as attribution in whole or in part to
the failure of an employer to provide the
plan administrator with full and complete
information) (see section 10.12).
If you are using this special
methodology to determine the general
compliance fee, do not complete line 7
and attach a written explanation that
details how the compliance fee was
determined and how the submission
satisfies the conditions in section 10.12.
When completing Form 8951, the plan
administrator would complete line 5 in
the normal manner by using the total
participant count reported on the most
recently filed Form 5500 series return for
the entire plan.

Page 4

Form 8951 (Rev. 1-2013)

Example. Multiple Employer Plan
TTDY has 3 participating companies.
The most recently filed Form 5500
shows the plan has 5,335 participants.
Plan participants are divided among the
companies in the following manner:
Corporation A has 125 participants
Corporation B has 10 participants
Corporation C has 5,200 participants
Assume Corporations A and B
incorrectly excluded eligible employees
from the plan by not providing the proper
information to the plan administrator due
to flaws in their respective HR and
payroll processes. Corporation C
properly included all eligible employees
and had no failures. A VCP submission
will be submitted to the Service to
resolve these operational failures. The
general compliance fee for a VCP
submission would normally be $20,000
given the participant count reported on
the Plan's latest filed Form 5500.
However, the plan administrator for
Multiple Employer Plan TTDY chooses to
calculate the general compliance fee
separately for each affected employer
based on the participants attributable to
that employer because the plan
administrator believes the filing satisfies
the conditions discussed in section
10.12. The general compliance fee in this
situation is determined in the following
manner:
Corporation A has 125 participants, so
the general compliance fee calculated
for this employer is $5,000.
Corporation B has 10 participants, so
the general compliance fee calculated
for this employer is $750.
Adding these two amounts together, the
total general compliance fee for this
submission is $5,750.
Step 3: If any of the reduced
compliance fee amounts are appropriate
for your VCP submission, check the
applicable boxes on line 8. However, if
(1) you cannot mark any of the boxes in
lines 8(h) through 8(j) for your
submission, and (2) your submission
involves one or more failures that are not
described in lines 8(a) through 8(g), then
you are not eligible for a reduced
compliance fee amount (even if your
submission includes one or more failures
described in lines 8(a) through 8(g)).
Under these circumstances, you should
simply check the appropriate box on line
7 and not check any of the boxes for
reduced compliance fee amounts on line
8. The reduced compliance fee amounts
and eligibility rules are as follows:
• Line 8(a). The VCP submission relates
to certain failures involving the late
adoption of good faith amendments,

interim amendments or amendments
required to implement optional tax law
changes, as described in section 6.05(3)
(a). The compliance fee is reduced to
$375 (see section 12.03(2)).
• Line 8(b). The VCP submission is
limited to late non-amender failures
described in section 6.05 and the VCP
submission is made within a 1-year
period following the expiration of the
plan's remedial amendment period for
complying with such changes. The
general compliance fee is reduced by
50%. See Section 12.03(1).
• Line 8(c). The VCP submission relates
to a failure to comply with Internal
Revenue Code (IRC) section 401(a)(9)
minimum distribution rules affecting 50
or fewer plan participants. The
compliance fee is reduced to $500 (see
section 12.02(2)).
• Line 8(d). The VCP submission relates
to a failure of participant loans to comply
with IRC section 72(p)(2) rules affecting
no more than 25% of plan participants in
any of the years in which the failure
occurred. The general compliance fee is
reduced by 50% (see section 12.02(3)).
• Line 8(e). The VCP submission relates
to a failure to timely adopt an
amendment (upon which a favorable
determination letter is conditioned)
within the applicable remedial
amendment period, provided the
required amendment is adopted within 3
months of the expiration of the remedial
amendment period for adopting the
amendment. The compliance fee is
reduced to $500 (see section 12.03(3)).
• Line 8(f). For 403(b) plans, the general
VCP compliance fee is reduced by 50%
if the VCP submission meets the
following conditions:
(a) It's solely limited to a single failure
involving a failure to timely adopt a
written 403(b) plan document;
(b) The VCP submission has been
made within the 1-year period
beginning with the date of publication
of Rev. Proc. 2013-12; and
(c) The VCP submission must be
submitted no later than December 31,
2013 (see section 12.02(5)).
• Line 8(g). The VCP submission is
limited to a request for a minor
modification of a previously issued
compliance statement and the request is
mailed to the IRS before the end of the
correction period provided for in the
compliance statement. The compliance
fee for the request is the lesser of: 50%
of the original compliance fee or $1,500
(see section 10.07(10)).

• Line 8(h). The compliance fee for a
SEP, SARSEP, or a SIMPLE IRA VCP
submission is generally $250 (see
section 12.06).
• Line 8(i). If the VCP submission is a
group submission from an eligible
organization as defined in section
10.11(2), the general compliance fee is
not applicable. The compliance fee for a
group submission is based on the
number of plans affected by the failure
described in the VCP submission. The
initial fee for the first 20 employers is
$10,000 and must be attached to Form
8951. An additional fee equal to the
product of the number of plans in excess
of 20 multiplied by $250 will also apply.
The IRS will request the additional fee, if
applicable. The maximum compliance
fee for a group submission is $50,000
(see section 12.05).
• Line 8(j). Section 12.02(4) gives the IRS
discretionary authority to waive the
compliance fee in the case of a
terminating orphan plan, if requested.
See section 5.03 for a definition of an
orphan plan. A VCP applicant who is an
eligible party as defined in section 5.03
can request that the compliance fee be
waived. Include a written explanation
that explains why a waiver should be
granted (see section 11.03(13)).
Step 4: If a VCP submission consists
of failures limited to lines 8(a) through 8(f)
and if lines 8(g) through 8(j) are not
applicable, then the compliance fee
amount will be the lesser of: the sum of
the reduced compliance fee amounts or
the general compliance fee amount. See
section 12.04. If the general compliance
fee amount is lower, simply check the
appropriate box on line 7 and do not
check any of the boxes on line 8. If the
total of the applicable reduced fee
amounts is less than the general
compliance fee amount, check the
applicable boxes on line 8 and include a
worksheet showing how you determined
the compliance fee amount for your
submission.
Example 1: Plan sponsor of XYZ
401(k) Plan requests a compliance
statement to correct (i) 401(a)(9)
minimum distribution failures (affecting
no more than 50 participants), (ii) late
adoption of interim amendments, and (iii)
nonamender failures (submitted within
one year after the remedial amendment
period has expired). The sponsor reports
300 plan participants on Line 5. The
required compliance fee is $3,375,
calculated as follows: (i) $500 (for 401(a)
(9) failures), plus (ii) $375 (for interim
amendment failures), plus (iii) $2500 (for
nonamender failures (based on 50% of
the general $5,000 compliance fee for
plans with 101 to 500 participants)).

Form 8951 (Rev. 1-2013)

Example 2: Assume the same facts as
Example 1, except the plan sponsor
reports 40 participants on Line 5. The
required compliance fee is $1,000,
calculated as follows: Pay the lesser of (i)
the general $1,000 compliance fee for
plans with 21 to 50 participants or (ii)
$1,375, calculated as follows: $500 (for
401(a)(9) failures), plus $375 (for interim
amendment failures), plus $500 (for
nonamender failures (based on 50% of
the $1,000 general compliance fee)).
Note. The compliance fee due on some
VCP submissions may ultimately be
higher than the amounts previously
mentioned on this form. Additional
compliance fees may be due if the VCP
submission involves:
(a) Egregious qualification failures;
(b) SEP, SARSEP or SIMPLE IRA
plans that choose to allow excess
amounts to remain within the affected
IRAs;
(c) Situations where the plan sponsor
has requested that the IRS waive the
additional 10% tax imposed by IRC
section 72(t) on certain plan distributions.
See sections 6.09(6), 12.06, and 12.07.
If applicable, the IRS will discuss the
matter with the plan sponsor and solicit
the additional compliance fee during the
review of the VCP submission.

Submission of Additional
Compliance Fees
The IRS's office of Employee Plans
Voluntary Compliance may contact you
regarding additional compliance fees
that may be due for a previously
submitted VCP case. Submit Form 8951
along with a copy of the check for the
additional compliance fee along with an
appropriate cover letter. Complete lines
1-5. It is important to complete line 6 by
checking the box and entering the
amount of the additional compliance fee
you are submitting plus the nine-digit
VCP case number that has been
assigned to your VCP submission. No
other items on the Form 8951 need to be
completed. Once a VCP submission has
been mailed to the IRS, an applicant
should not mail any checks to the IRS for
any compliance fee matters unless the
applicant has received specific
instructions from the IRS.

Page

Paperwork Reduction Act Notice. We
ask for the information on this form to
carry out the internal revenue laws of the
United States. If you want to have your
VCP submission approved by the IRS,
you are required to give us the
information. We need it to determine
whether your correction proposals meet
the legal requirements applicable to
qualified retirement plans.
You are not required to provide the
information requested on a form that is
subject to the Paperwork Reduction Act
unless the form displays a valid OMB
control number. Books or records
relating to a form or its instructions must
be retained as long as their contents
may become material in the
administration of any internal revenue
law. Generally, tax returns and return
information are confidential, as required
by IRC section 6103.

5

The estimated average time is:
Recordkeeping . . . . 3 hr., 21 min.
Learning about the
law or the form . . .
2 hr., 39 min.
Preparing the form. . . 3 hr., 45 min.
Copying, assembling,
and sending the
form to the IRS . . .
0 hr., 16 min.
If you have comments concerning the
accuracy of this time estimate or
suggestions for making this form
simpler, we would be happy to hear from
you. You can write to:
Internal Revenue Service
Tax Products Coordinating Committee
SE:W:CAR:MP:T:I
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224
Do not send this form to this address.
Instead, see Where To File above.


File Typeapplication/pdf
File TitleForm 8951 (Rev. January 2013)
SubjectFillable
AuthorSE:W:CAR:MP
File Modified2013-01-30
File Created2009-07-27

© 2024 OMB.report | Privacy Policy