Revenue Procedure 2015-27

Rev. Proc. 2015-27
SECTION 1. PURPOSE
The Employee Plans Compliance Resolution System (“EPCRS”) sets forth a
comprehensive system of correction programs for sponsors of retirement plans that are
intended to satisfy the requirements of § 401(a), 403(a), 403(b), 408(k), or 408(p) of the
Internal Revenue Code ("Code"), but that have failed to meet those requirements for a period
of time. The components of EPCRS are the Self-Correction Program ("SCP"), the Voluntary
Correction Program ("VCP"), and the Audit Closing Agreement Program ("Audit CAP").
EPCRS permits plan sponsors to correct failures and thereby continue to provide employees
with retirement benefits on a tax-favored basis. The most recent restatement of EPCRS is set
forth in Rev. Proc. 2013-12, 2013-4 I.R.B. 313. The modifications to Rev. Proc. 2013-12
reflected in this revenue procedure include miscellaneous changes made to improve EPCRS,
such as reducing VCP compliance fees relating to failures to meet the requirements of § 72(p)
with respect to participant loans, and clarifying that for certain Overpayments, as defined in
sections 5.01(3)(c) and 5.02(4) of Rev. Proc. 2013-12, a plan may use correction methods
other than the correction methods set forth in sections 6.06(3) and 6.06(4) of Rev. Proc. 201312. This revenue procedure also requests comments on recoupment of Overpayments.
SECTION 2. BACKGROUND
.01 The Internal Revenue Service (Service) is issuing this revenue procedure to
improve and update EPCRS by making limited modifications and clarifications to Rev. Proc.
2013-12. These modifications to EPCRS are described in Section 3, and revisions to Rev.
Proc. 2013-12 implementing these modifications are set forth in Section 4.
.02 Section 2.05 of Rev. Proc. 2013-12 provides that it is expected that the EPCRS
revenue procedure will continue to be updated, in whole or in part, from time to time. It is
anticipated that updates will provide further improvements to EPCRS based on comments that
are currently being evaluated and on additional comments that may be received.
.03 The Treasury Department and the Service continue to invite further comments on
how to improve EPCRS. For information about how to submit comments, see section 7 of this
revenue procedure.
SECTION 3. DESCRIPTION OF MODIFICATIONS TO EPCRS
.01 Effect on programs. This revenue procedure modifies, but does not supersede,
Rev. Proc. 2013-12.

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.02 Clarification to the correction rules on Overpayment failures. (1) Reasonable and
appropriate correction. Section 6.02(2) of Rev. Proc. 2013-12 provides that any correction of a
failure should be reasonable and appropriate for the failure. Correction rules for dealing with
Overpayments are described in sections 6.06(3) and 6.06(4) of Rev. Proc. 2013-12. Under
these correction rules, the employer is to take reasonable steps to have the Overpayment
returned to the plan. The Service has been informed that some plans have demanded
recoupment of large amounts from plan participants and beneficiaries on account of plan
administration errors made over lengthy periods of time, and that plan participants and
beneficiaries, particularly those who are older individuals, may have financial difficulty meeting
some corrective actions that have been sought by plan administrators, including the return of
Overpayments with substantial accumulated interest.
(2) Flexibility in correction of Overpayment failures. Some plans may be interpreting
the correction rules in Rev. Proc. 2013-12 as requiring a demand for recoupment from plan
participants and beneficiaries in all cases. However, depending on the facts and
circumstances, correcting an Overpayment under EPCRS may not need to include requesting
that an Overpayment be returned to the plan by plan participants and beneficiaries.
(3) Description of modifications to clarify that there is flexibility in correcting
Overpayment failures. Sections 6.06(3) and 6.06(4) of Rev. Proc. 2013-12 are modified to
clarify that that there is flexibility in correcting an Overpayment under EPCRS. For example,
depending on the nature of the Overpayment failure (such as an Overpayment failure resulting
from a benefit calculation error), an appropriate correction method may include using rules
similar to the correction methods of sections 6.06(3) and 6.06(4) in Rev. Proc. 2013-12 but
having the employer or another person contribute the amount of the Overpayment (with
appropriate interest) to the plan in lieu of seeking recoupment from plan participants and
beneficiaries. Another example of an appropriate correction method includes a Plan Sponsor
adopting a retroactive amendment to conform the plan document to the plan’s operations in
accordance with section 4.05 of Rev. Proc. 2013-12. Any correction method used must be
consistent with the correction principles in section 6.02 and any applicable rules under
EPCRS. The modifications are in sections 4.06 and 4.07 of this revenue procedure.
(4) Comments relating to recoupment of Overpayments. The Service intends to make
further revisions to Rev. Proc. 2013-12 regarding the correction of Overpayments and seeks
comments on this issue. For information about how to submit comments, see section 7 of this
revenue procedure. Comments relating to recoupment of Overpayments will be shared with
the Department of Labor. Comments are requested on-(a) whether, and under what circumstances and conditions, correction should require
employer make-whole contributions rather than recouping prior Overpayments from
participants and beneficiaries;

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(b) whether guidance should be provided on Overpayments relating to benefit
calculation errors and whether the correction method should follow rules similar to the rules on
the recoupment of overpayments issued by the Pension Benefits Guaranty Corporation in 29
C.F.R. § 4022.82;
(c) whether additional guidance is needed regarding the calculation of interest on
Overpayments for benefit calculation errors; and
(d) whether any other changes or additional guidance is needed relating to the
recoupment of Overpayments, including guidance on any unusual circumstances in which full
corrective payments to a plan should not be required for Overpayments.
.03 Description of other modifications. The other modifications to Rev. Proc. 2013-12
consist of the following revisions:
x

Revising section 4.04 of Rev. Proc. 2013-12 to extend SCP eligibility so that repeated
corrections of excess annual additions will not prevent certain plans from satisfying the
SCP requirement to have established practices and procedures as long as the plan
corrects excess annual additions through the return of elective deferrals to affected
employees within 9½ months after the end of the plan’s limitation year. See section
4.01 of this revenue procedure.

x

Revising section 6.02(5)(d) of Rev. Proc. 2013-12 to delete a reference to the Social
Security letter forwarding program because the Social Security Administration has
announced that the program is no longer available as a method for locating lost plan
participants who are owed additional retirement benefits. See section 4.04 of this
revenue procedure.

x

Revising sections 6.05(1), 6.05(2), and 6.05(3)(c) of Rev. Proc. 2013-12 to clarify that, if
corrective plan amendments are used to correct Qualification Failures as defined in
section 5.01(2), the requirement to submit a determination letter application to the
Service does not apply to certain amendments made to prototype or volume submitter
plans. Section 6.05(1) is also revised to provide that a determination letter application is
not required to be submitted if more than 12 months have passed since distribution of
substantially all plan assets as part of the plan’s termination. See section 4.05 of this
revenue procedure.

x

Revising section 10.07(9) of Rev. Proc. 2013-12 to extend the correction period for
adopting certain corrective plan amendments in situations in which a determination
letter application is required to be submitted concurrently with the VCP submission.
See sections 4.08 of this revenue procedure.

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x

Revising sections 11.01 and 11.02 of Rev. Proc. 2013-12 to require that applicants
electing to use model VCP submission documents submit such documents by
completing the Form 14568 series. As the model VCP submission documents are now
published on forms, Appendix C model VCP submission documents are no longer part
of Rev. Proc. 2013-12. See section 4.09 of this revenue procedure.

x

Revising section 11.11 of Rev. Proc. 2013-12 to provide that applicants wishing to
obtain an acknowledgement of receipt of a VCP submission must use IRS Letter 5265,
Form 8950 Application for Voluntary Correction Program Acknowledgment Letter. See
section 4.11 of this revenue procedure.

x

Revising section 12.02(2) of Rev. Proc. 2013-12 to expand the availability of a reduced
compliance fee for submissions under VCP that involve the failure to satisfy the
minimum distribution requirements. See section 4.12 of this revenue procedure.

x

Revising section 12.02(3) of Rev. Proc. 2013-12 to modify the method for determining
compliance fees for submissions under VCP relating solely to participant loans that do
not satisfy the requirements of § 72(p). This change is being made to provide an
improved method for determining compliance fees for large plans that have a relatively
small number of loans that do not satisfy the requirements of § 72(p). See section 4.13
of this revenue procedure.

x

Removing Appendices C and D in light of other modifications made in this revenue
procedure. See section 4.17 of this revenue procedure.

x

Revising sections 4.11, 5.01(3)(c), 11.10, 12.06(2), Appendix A .08, and Appendix B,
section 2.07(2)(b), Example 26, of Rev. Proc. 2013-12 to reflect appropriate citations or
cross references. See sections 4.02, 4.03, 4.10, 4.14, 4.15, and 4.16 of this revenue
procedure.

SECTION 4. MODIFICATIONS TO REV. PROC. 2013-12
.01 Section 4.04 of Rev. Proc. 2013-12 is revised to provide for an extended period of
time to correct excess annual additions through the return of elective deferrals to affected
employees by changing the reference “two and a half months” to “9½ months.” As revised,
section 4.04 reads as follows:
4.04 Established practices and procedures. In order to be
eligible for SCP, the Plan Sponsor or administrator of a plan must have
established practices and procedures (formal or informal) reasonably
designed to promote and facilitate overall compliance with applicable
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Code requirements. For example, the plan administrator of a Qualified
Plan that may be top-heavy under § 416 may include in its plan
operating manual a specific annual step to determine whether the plan
is top-heavy and, if so, to ensure that the minimum contribution
requirements of the top-heavy rules are satisfied. A plan document
alone does not constitute evidence of established procedures. In order
for a Plan Sponsor or administrator to use SCP, these established
procedures must have been in place and routinely followed, and an
Operational Failure must have occurred through an oversight or
mistake in applying them. SCP may also be used in situations where
the Operational Failure occurred because the procedures that were in
place, while reasonable, were not sufficient to prevent the occurrence of
the failure. A plan that provides for elective deferrals and nonelective
employer contributions that are not matching contributions is not treated
as failing to have established practices and procedures to prevent the
occurrence of a § 415(c) violation in the case of a plan under which
excess annual additions under § 415(c) are regularly corrected by
return of elective deferrals to the affected employee within 9½ months
after the end of the plan’s limitation year. The correction, however,
should not violate another applicable Code requirement. In the case of
a failure that relates to Transferred Assets or to a plan assumed in
connection with a corporate merger, acquisition, or other similar
employer transaction between the Plan Sponsor and the sponsor of the
transferor plan or the prior Plan Sponsor of an assumed plan, the plan
is considered to have established practices and procedures for the
Transferred Assets if such practices and procedures are in effect for the
Transferred Assets by the end of the first plan year that begins after the
corporate merger, acquisition, or other similar transaction. (See section
6.10(2) for special rules regarding established practices and procedures
for 403(b) Plans.)
.02 Section 4.11 of Rev. Proc. 2013-12 is revised by deleting all references to section
12.06 and replacing them with references to section 12.07, clarifying language regarding a
defined contribution plan “to which” a contribution is made, and, to be consistent with other
references to the Internal Revenue Service in Rev. Proc. 2013-12, replacing “IRS” with the
term “Service.” As revised, section 4.11 reads as follows:
.11 Egregious failures.
SCP is not available to correct
Operational Failures that are egregious. Egregious failures include: (a)
a plan that has consistently and improperly covered only highly
compensated employees; (b) a plan that provides more favorable
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benefits for an owner of the employer based on a purported collective
bargaining agreement where there has in fact been no good faith
bargaining between bona fide employee representatives and the
employer (see Notice 2003-24, 2003-1 C.B. 853, with respect to welfare
benefit funds); or (c) a defined contribution plan to which a contribution
is made on behalf of a highly compensated employee that is several
times greater than the dollar limit set forth in § 415(c). VCP is available
to correct egregious failures. However, egregious failures are subject
to the VCP fees described in section 12.07 and, for purposes of section
12.07, an egregious failure would include any case in which the Service
concludes that the parties controlling the plan recognized that the action
taken would constitute a failure and the failure either involves a
substantial number of participants or beneficiaries or involves
participants who are predominantly highly compensated employees.
Audit CAP also is available to correct egregious failures.
.03 Section 5.01(3)(c) of Rev. Proc. 2013-12 is revised by modifying the last sentence
to clarify that the corrections for overpayments from defined benefit plans and defined
contribution plans are described in sections 6.06(3) and 6.06(4) of Rev. Proc. 2013-12,
respectively. As revised, section 5.01(3)(c) reads as follows:
(c) Overpayment.
The term "Overpayment" means a
Qualification Failure due to a payment being made to a participant or
beneficiary that exceeds the amount payable to the participant or
beneficiary under the terms of the plan or that exceeds a limitation
provided in the Code or regulations. Overpayments include both
payments from a defined benefit plan and payments from a defined
contribution plan (either not made from the participant's or beneficiary's
account under the plan or not permitted to be paid under the Code, the
regulations, or the terms of the plan). However, an Overpayment does
not include a payment that is made pursuant to a correction method
provided under this revenue procedure for a different Qualification
Failure. Overpayments must be corrected in accordance with section
6.06(3) for defined benefit plans and section 6.06(4) for defined
contribution plans and 403(b) Plans.
.04 Section 6.02(5)(d) of Rev. Proc. 2013-12 is revised by deleting the reference to the
Social Security letter forwarding program. As revised, section 6.02(5)(d)(i) reads as follows:
(d) Locating lost participants. (i) Reasonable actions must be taken to
find all current and former participants and beneficiaries to whom additional
benefits are due, but who have not been located after a mailing to the last
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known address. In general, such actions include, but are not limited to, a
mailing to the individual’s last known address using certified mail and, if that
is unsuccessful, an additional search method, such as the use of a
commercial locator service, a credit reporting agency, or Internet search
tools. Depending on the facts and circumstances, the use of more than one
of these additional search methods may be appropriate. A plan will not be
considered to have failed to correct a failure due to the inability to locate an
individual if reasonable actions to locate the individual have been undertaken
in accordance with this paragraph, provided that, if the individual is later
located, the additional benefits are provided to the individual at that time.
.05 Sections 6.05(1), 6.05(2), and 6.05(3)(c) of Rev. Proc. 2013-12 are clarified to state
that the requirement to submit a determination letter application to the IRS does not apply to
corrective amendments made to pre-approved plans on which the adopting employer has
reliance if such amendments are part of an adopted prototype or volume submitter plan on
which the adopting employer continues to have reliance after the adoption of the corrective
amendments and in cases in which more than 12 months have passed since the distribution of
substantially all the plan assets following a plan termination.
(a) As revised, sections 6.05(1) and 6.05(2) of Rev. Proc. 2013-12 read as follows:
.05 Submission of a determination letter application. (1) In general.
This section 6.05 sets forth the situations in which a determination letter
application is required to be submitted as part of the correction of a
Qualification Failure if the correction includes a plan amendment. If a
determination letter application is required under this section 6.05, then,
unless otherwise specified in this revenue procedure, the provisions of
Rev. Proc. 2007-44 will apply. Thus, for example, in the case of an
ongoing individually designed plan, a determination letter application
will be reviewed with respect to all items included in the Cumulative List
(as defined in Rev. Proc. 2007-44) that would apply to the remedial
amendment cycle during which the determination letter is filed.
Notwithstanding any other part of this section 6.05, a determination
letter application is not required and may not be submitted with the VCP
submission if (a) the correction by plan amendment is achieved through
(i) the adoption of an amendment that is designated as a model
amendment by the Service, (ii) the adoption of a prototype or volume
submitter plan with an opinion or advisory letter as provided in Rev.
Proc. 2015-6, 2015-1 I.R.B. 194, on which the Plan Sponsor has
reliance (or is treated as having reliance pursuant to section 6.05(5)
below), or (iii) the adoption of an amendment to a previously adopted
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prototype or volume submitter plan with an opinion or advisory letter as
provided in Rev. Proc. 2015-6, on which the Plan Sponsor has reliance
(or is treated as having reliance pursuant to section 6.05(5) below) after
the adoption of such amendment, (b) the failure corrected is a
Demographic Failure, or (c) more than 12 months have elapsed since
the date of distribution of substantially all plan assets in connection with
the termination of the plan.
(2) Determination letter application required. (a) VCP and Audit
CAP. (i) Operational failure corrected by plan amendment during oncycle year. Except as provided in section 6.05(1), to correct an
Operational Failure that includes a plan amendment (in a case in which
the Plan Sponsor submits the failure under VCP or corrects the failure
under Audit CAP during an on-cycle year or in connection with a plan
termination), a determination letter application is required for
individually designed plans. An “on-cycle year” means the last 12
months of the plan’s remedial amendment cycle set forth in Rev. Proc.
2007-44.
(ii) Nonamender failure. Except as provided in section 6.05(1) and
(3)(a), a determination letter application is required for individually
designed plans in order to correct a nonamender failure under VCP or
Audit CAP, whether or not the plan is submitted under VCP or corrected
under Audit CAP during an on-cycle year. For this purpose, the term
“nonamender failure” means a failure to amend the plan to correct a
disqualifying provision described in § 1.401(b)-1(b) within the applicable
remedial amendment period. In general, a disqualifying provision
includes a provision in the plan document that violates a qualification
requirement of the Code or the absence of a provision that causes the
plan to fail to satisfy a qualification requirement of the Code. A
disqualifying provision also includes any provision designated by the
Commissioner as a disqualifying provision under § 1.401(b)-1(b)(3).
(b) SCP. Except as provided in section 6.05(1), in the case of any
correction of an Operational Failure through plan amendment under
SCP that is permitted under section 4.05(2) of this revenue procedure,
a Plan Sponsor must submit a determination letter application for the
plan, including the corrective plan amendment, during the plan’s next
on-cycle year if individually designed, or earlier, if in connection with the
plan’s termination. The determination letter application should be
mailed to the address provided in the instructions for the applicable
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Form 5300 or 5310. As part of the determination letter submission, the
cover letter must identify the amendment as a corrective amendment
under SCP. In addition, the Plan Sponsor must include in the cover
letter to the application: (1) a statement that neither the plan nor the
Plan Sponsor has been a party to an abusive tax avoidance transaction
(as defined in section 4.13(2) of this revenue procedure); or (2) a brief
identification of any abusive tax avoidance transaction to which the plan
or the Plan Sponsor has been a party.
(b) As revised, section 6.05(3)(c) of Rev. Proc. 2013-12 reads as
follows:
(c) Operational Failures corrected through plan amendment under
VCP and Audit CAP during an off-cycle year. If, during an off-cycle
year, a Plan Sponsor submits an Operational Failure under VCP or
corrects such a failure under Audit CAP, then a determination letter
application is not required and may not be submitted with the VCP
submission or as part of the correction of the failure under Audit CAP.
If the plan amendment is accepted as a proper correction for an
Operational Failure, the compliance statement under VCP or closing
agreement issued under Audit CAP constitutes a determination on the
effect of the plan amendment on the qualification of the plan. The
reliance provided by a compliance statement or closing agreement is
limited to the specific failures and years specified and does not provide
reliance for any other failure or year. Except as provided in section
6.05(1), with respect to correction of an Operational Failure through
plan amendment, the compliance statement issued under VCP or
closing agreement issued under Audit CAP is subject to the condition
that the amendment be submitted as part of a determination letter
submission during the plan’s next on-cycle year, or, if earlier, in
connection with the plan’s termination, and that a favorable
determination letter be issued with respect to the plan. Generally this
determination letter application requirement is limited to individually
designed plans. The determination letter application should be mailed
to the address listed in the instructions of the applicable Form 5300, or
5310 and should include a copy of the related compliance statement or
closing agreement. A Plan Sponsor that corrects an Operational
Failure through a plan amendment under Audit CAP during an off-cycle
year should also include a copy of the closing agreement when
submitting a determination letter application during the plan’s next oncycle year, or if earlier, in connection with the plan’s termination.
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.06 Section 6.06(3) of Rev. Proc. 2013-12 is revised to clarify that there is
flexibility in correcting an Overpayment in a defined benefit plan as long as the
correction method is consistent with the correction principles in section 6.02 and any
other applicable rules under EPCRS. As revised, section 6.06(3) reads as follows:
(3) Correction of Overpayment (defined benefit plans).
An
Overpayment from a defined benefit plan is corrected in accordance
with rules similar to the Return of Overpayment and Adjustment of
Future Payments correction methods described in section 2.04(1) of
Appendix B or any other appropriate correction method. Depending on
the nature of the Overpayment failure, an appropriate correction
method may include using rules similar to the correction method
described in section 2.04(1) of Appendix B but having the employer or
another person contribute the amount of the Overpayment (with
appropriate interest) to the plan in lieu of seeking recoupment from plan
participants and beneficiaries. Another example of an appropriate
correction method includes a Plan Sponsor adopting a retroactive
amendment to conform the plan document to the plan’s operations
(subject to the requirements of section 4.05). Any other correction
method used must satisfy the correction principles of section 6.02 and
any other applicable rules in this revenue procedure.
.07 Section 6.06(4)(f) of Rev. Proc. 2013-12 is added to clarify that there is
flexibility in correcting an Overpayment in a defined contribution plan as long as the
correction method is consistent with the correction principles in section 6.02 and any
other applicable rules under EPCRS. As added, section 6.06(4)(f) reads as follows:
(f) Other correction methods. Other appropriate correction methods
may be used to correct Overpayment failures from a defined
contribution plan. Depending on the nature of the Overpayment failure,
an appropriate correction method may include using rules similar to the
correction method in section 6.06(4)(a) but having the employer or
another person contribute the amount of the Overpayment (with
appropriate interest) to the plan in lieu of seeking recoupment from plan
participants and beneficiaries. Another example of an appropriate
correction method includes a Plan Sponsor adopting a retroactive
amendment to conform the plan document to the plan’s operations
(subject to the requirements of section 4.05). Any other correction
method used must satisfy the correction principles of section 6.02 and
any other applicable rules of this revenue procedure.

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.08 Section 10.07(9) of Rev. Proc. 2013-12 is revised to extend the period to
adopt certain corrective plan amendments and eliminate a cross-reference. Section
10.07(9) is also reorganized for clarity. As revised, section 10.07(9) reads as follows:
(9) Timing of correction. (a) In general. The Plan Sponsor must
implement the specific corrections and administrative changes set forth
in the compliance statement within 150 days of the date of the
compliance statement. Any request for an extension of this time period
must be made in writing prior to the expiration of the correction period
and must be approved by the Service.
(b) Good faith, interim, or optional law change amendments.
Correction of the failure to adopt timely good faith amendments, interim
amendments, or amendments relating to the implementation of optional
law changes, as described in section 6.05(3)(a), must be made by the
date of the submission. Thus, the submission should include the
executed amendments that would correct this failure.
(c) Other plan amendments. Except as provided in section
10.07(9)(b), if a determination letter application is required to be filed
with a VCP submission as described in section 6.05, the corrective plan
amendment must be adopted by the later of 150 days after the date of
the compliance statement or 91 days after a favorable determination
letter is issued. However, for a governmental plan (within the meaning
of § 414(d)), the corrective amendment must be adopted by the later of
150 days after the date of the compliance statement or the 91st day
after the close of the first legislative session that begins more than 120
days after a favorable determination letter is issued.
.09 Revising sections 11.01 and 11.02 of Rev. Proc. 2013-12 to require that Plan
Sponsors that choose to use Model VCP Submission Documents must submit such
documents by completing Form 14568, Appendix C Part I, Model VCP Submission
Compliance Statement (and, if applicable, Form(s) 14568-A through 14568-I). As revised,
sections 11.01 and 11.02 read as follows:
.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
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items set forth in this section 11. Appendix C to Rev. Proc. 2013-12
provided assistance to applicants in satisfying these requirements. In
2014, the Appendix C Model Compliance Statement and related
Schedules were published by the Service as official IRS forms. The
submission of a Model Compliance Statement and Schedules remains
optional.
However, if an applicant wishes to submit a Model
Compliance Statement, Form 14568, Appendix C Part I, Model VCP
Submission Compliance Statement, and, if appropriate, one or more
schedules, Forms 14568-A through 14568-I, must be used. Appendix
C model documents were deleted pursuant to Rev. Proc. 2015-27,
which will appear in I.R.B. 2015-16, and those documents may not be
submitted as Model Compliance Statements. To avoid confusion, Form
14568 and Forms 14568-A through 14568-I will be revised to remove
references to “Appendix C”. In the meantime, applicants may use the
current versions of Form 14568 and Forms 14568-A through 14568-I
that are available on the IRS website (www.irs.gov). The Service also
reserves the right to modify the Form 14568 series to improve usability,
reflect changes in law, or create additional Schedules by adding new
forms to the Form 14568 series.
.02 Use of Schedules (Forms 14568-A through 14568-I). (1)
Schedules 1 through 9 provide descriptions of common qualification
failures and standardized correction methods which may be submitted
in lieu of individually drafted descriptions. For applicants that do not
choose to use the Model Compliance Statement, 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) The following failures are described in the Schedules:
(a) Form 14568-A, Schedule 1 - Interim and Certain Discretionary
Nonamender Failures. If the Plan Sponsor failed to adopt timely good
faith amendments, interim amendments, or amendments required to
reflect the changed operation of the plan on account of the Plan
Sponsor’s decision to implement optional law changes (see section
6.05(3)(a) of this revenue procedure for a description of each of these
amendments), the Plan Sponsor may submit Form 14568-A, which may
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be used 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.
(b) Form 14568-B, Schedule 2 - Nonamender Failures (other than
those to which Schedule 1 applies) and Failure to Adopt a 403(b) Plan
Timely. If the Plan Sponsor failed to adopt timely amendments to
comply with required legislative or regulatory changes (other than as
described in section 11.02(4)(a)) or failed to adopt a written 403(b) Plan
timely in accordance with the final regulations under § 403(b) and
Notice 2009-3, the Plan Sponsor may submit Form 14568-B.
(c) Form 14568-C, Schedule 3 - SEPs and SARSEPs. If the Plan is
a SEP or a SARSEP and experienced one or more of the failures
shown on Schedule 3 and the Plan Sponsor proposes to correct such
failure(s) by using the method(s) provided on such schedule, the Plan
Sponsor may submit Form 14568-C.
(d) Form 14568-D, Schedule 4 - SIMPLE IRAs. If the Plan is a
SIMPLE IRA and experienced one or more of the failures shown on
Schedule 4 and the Plan Sponsor proposes to correct such failure(s) by
using the method(s) provided on such schedule, the Plan Sponsor may
submit Form 14568-D.
(e) Form 14568-E, Schedule 5 - Plan Loan Failures (Qualified Plans
and 403(b) Plans). If the Plan Sponsor failed to administer loans in
accordance with the provisions of § 72(p)(2), the failure solely relates to
employees who are neither key employees (as defined in § 416(i)(1))
nor self-employed individuals (as defined in § 401(c)(1)(B)), and the
Plan Sponsor proposes to correct such failure(s) by using the
method(s) provided on Schedule 5, the Plan Sponsor may submit Form
14568-E.
(f) Form 14568-F, Schedule 6 - Employer Eligibility Failure (§ 401(k)
and 403(b) Plans only). If the Plan Sponsor failed to satisfy the criteria
for an employer to sponsor either a § 401(k) plan or a 403(b) Plan and
proposes to correct such failure by using the method provided on
Schedule 6, the Plan Sponsor may submit Form 14568-F.
(g) Form 14568-G, Schedule 7 - Failure to Distribute Elective
Deferrals in Excess of the § 402(g) Limit. If the plan failed to distribute
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elective deferrals made in excess of the § 402(g) limit and the Plan
Sponsor proposes to correct such failure using the method described in
Appendix A, section .04, the Plan Sponsor may submit Form 14568-G.
(h) Form 14568-H, Schedule 8 - Failure to Pay Required Minimum
Distributions Timely under § 401(a)(9). If the plan failed to make
required minimum distributions pursuant to § 401(a)(9) and proposes to
correct such failure using the method described in Appendix A, section
.06, the Plan Sponsor may submit Form 14568-H.
(i) Form 14568-I, Schedule 9 - Correction by Plan Amendment (in
accordance with Appendix B). The Plan Sponsor may submit Form
14568-I if a proposed correction to one or more of the failures described
in Schedule 9 is being made.
.10 Section 11.10 of Rev. Proc. 2013-12 is revised to replace “Eligible Person”
with “Eligible Party.” As revised, section 11.10 reads as follows:
.10 Orphan Plan. The VCP submission should indicate, if
appropriate, 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 Section 11.11 of Rev. Proc. 2013-12 is revised to provide that applicants that
wish to obtain an acknowledgement of receipt of a VCP submission must use IRS Letter
5265. As revised, section 11.11 reads as follows:
.11 Acknowledgement letter. The Service 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, Form 8950
Application for Voluntary Correction Program Acknowledgement Letter,
and includes it in the submission. A separate IRS Letter 5265 should
be included for each plan submitted.
.12 Section 12.02(2) of Rev. Proc. 2013-12 is revised to expand the availability
of a reduced compliance fee for submissions under VCP involving the failure to satisfy
the minimum distribution requirements. As revised, section 12.02(2) reads as follows:
(2) If (a) a VCP submission involves a failure to satisfy the minimum
distribution requirements of § 401(a)(9), (b) such failure is the only
failure described in the submission, and (c) the failure would result in
the imposition of the excise tax under § 4974, the compliance fee is
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$500 if 150 or fewer participants are affected and $1,500 if 151 to 300
participants are affected. If the number of affected participants is
greater than 300, the general fee under section 12.02 applies.
.13 Section 12.02(3) of Rev. Proc. 2013-12 is revised to modify the method for
determining compliance fees for submissions under VCP relating solely to participant loans
that do not satisfy the requirements of § 72(p). As revised, section 12.02(3) reads as follows:
(3) If (a) a VCP submission involves a loan failure corrected in
accordance with section 6.07, (b) the failure does not affect more than
25% of the Plan Sponsor’s participants in any year in which the failure
occurred, and (c) the failure is the only failure described in the
submission, the compliance fee will be:
Number of
Participants
with Loan
Failures
13 or fewer
14 to 50
51 to 100
101 to 150
Over 150

Compliance
Fee

$ 300
$ 600
$1,000
$ 2,000
$ 3,000

.14 Section 12.06(2) of Rev. Proc. 2013-12 is revised to replace a reference to section
6.10(1) with a reference to section 6.11(1). As revised, section 12.06(2) reads as follows:
(2) In any case in which a SEP or SIMPLE IRA Plan correction
is not similar to a correction for a similar Qualification Failure (as
provided under section 6.11(1)), the Service may impose an additional
fee. If the failure involves an Excess Amount under a SEP or a
SIMPLE IRA Plan and the Plan Sponsor retains the Excess Amount in
the SEP or SIMPLE IRA Plan, a fee equal to at least 10% of the Excess
Amount with no adjustment for Earnings will be imposed. This is in
addition to the SEP or SIMPLE IRA Plan compliance fee set forth in
section 12.06(1).
.15 Appendix A .08 of Rev. Proc. 2013-12 is revised by replacing the reference to
section 6.06(3) of Rev. Proc. 2013-12 in the last sentence with a reference to section 6.06(4).
As revised, Appendix A .08 reads as follows:

plan.

.08 Failure to satisfy the § 415 limits in a defined contribution
For limitation years beginning before January 1, 2009, the
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permitted correction for failure to limit annual additions (other than
elective deferrals and after-tax employee contributions) allocated to
participants in a defined contribution plan as required in § 415 (even if
the excess did not result from the allocation of forfeitures or from a
reasonable error in estimating compensation) is to place the excess
annual additions into an unallocated account, similar to the suspense
account described in § 1.415-6(b)(6)(iii) (as it appeared in the April 1,
2007 edition of 26 CFR part 1) prior to amendments made by the final
regulations under § 415, to be used as an employer contribution, other
than elective deferrals, in the succeeding year(s). While such amounts
remain in the unallocated account, the Plan Sponsor is not permitted to
make additional contributions to the plan. The permitted correction for
failure to limit annual additions that are elective deferrals or after-tax
employee contributions (even if the excess did not result from a
reasonable error in determining compensation, the amount of elective
deferrals or after-tax employee contributions that could be made with
respect to an individual under the § 415 limits) is to distribute the
elective deferrals or after-tax employee contributions using a method
similar to that described under § 1.415-6(b)(6)(iv) (as it appeared in the
April 1, 2007 edition of 26 CFR part 1) prior to amendments made by
the final regulations under § 415. Elective deferrals and after-tax
employee contributions that are matched may be returned to the
employee, provided that the matching contributions relating to such
contributions are forfeited (which will also reduce excess annual
additions for the affected individuals).
The forfeited matching
contributions are to be placed into an unallocated account to be used
as an employer contribution, other than elective deferrals, in
succeeding periods. For limitation years beginning on or after January
1, 2009, the failure to limit annual additions allocated to participants in a
defined contribution plan as required in § 415 is corrected in
accordance with section 6.06(2) and (4) of this revenue procedure.
.16 In Appendix B, section 2.07(2)(b) of Rev. Proc. 2013-12, the correction for Example
26 is modified by replacing the first reference to 2005 in the last sentence with 2007. As
revised, the correction reads as follows:
Correction:
Employer K corrects the failure under VCP by adopting a plan
amendment in 2007, 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
Page 16 of 17

hardship distribution option is available to all employees. Thus, the
amendment satisfies § 401(a), and the plan as amended in 2007 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.
.17 Appendices C and D of Rev. Proc. 2013-12 are removed.
SECTION 5. EFFECT ON OTHER DOCUMENTS
Rev. Proc. 2013-12 is modified by this revenue procedure.
SECTION 6. EFFECTIVE DATE
This revenue procedure is generally effective July 1, 2015. However, Plan Sponsors
are permitted, at their option, to apply the provisions of this revenue procedure on or after
March 27, 2015.
SECTION 7. PUBLIC COMMENTS
The Treasury Department and the Service invite comments on this revenue procedure.
Send submissions to CC:PA:LPD:PR, (Rev. Proc. 2015-27), Room 5203, Internal Revenue
Service, PO Box 7604, Ben Franklin Station, Washington, D.C. 20044. Comments may also
be hand delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to: Internal
Revenue Service, CC:PA:LPD:PR, (Rev. Proc. 2015-27), Courier’s Desk, Internal Revenue
Service, 1111 Constitution Avenue, N.W., Washington DC. Alternatively, comments may be
submitted via the Internet at [email protected] (Rev. Proc. 2015-27).
For the request for comments in section 3.02(4) of this revenue procedure, please submit
written comments by July 20, 2015. All comments will be available for public inspection.
SECTION 8. PAPERWORK REDUCTION ACT
The collection of information contained in Rev. Proc. 2013-12 has been reviewed and
approved by the Office of Management and Budget in accordance with the Paperwork
Reduction Act (44 U.S.C. 3507) under control number 1545-1673. The modifications made in
this revenue procedure to Rev. Proc. 2013-12 do not impose any additional paperwork burden.
SECTION 9. DRAFTING INFORMATION
The principal author of this revenue procedure is Kathleen Herrmann of the Office of the
Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). For further
information regarding this revenue procedure, contact Kathleen Herrmann or Vernon Carter at
(202) 317-6799 (not a toll-free number).

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