Plan Document Failure — a plan provision (or absence of a plan provision) that, on its face, violates the requirements of IRC 401(a) or IRC 403(a).

Operational Failure — a failure that arises solely from the failure to follow plan provisions.

Demographic Failure — a failure to satisfy the requirements of IRC 401(a)(4), IRC 401(a)(26) or IRC 410(b).

Employer Eligibility Failure — an employer that fails to meet the employer eligibility requirements to establish an IRC 401(k) plan or that adopted a plan intended to include a qualified cash or deferred arrangement. This includes tax-exempt employers who were prohibited from adopting an IRC 401(k) plan between 1987 and 1986, and governmental employers who adopted an IRC 401(k) plan after May 6, 1986.

Plan Document Failure — a plan provision (or the absence of a plan provision) that, on its face, violates the requirements of IRC 403(b). This includes the failure to adopt a written plan by December 31, 2009, that complied with the final IRC 403(b) Treasury regulations and the failure to amend the plan for any other new requirement that was not adopted within the plan's applicable remedial amendment period.

Operational Failure — a failure that arises solely from the failure to follow plan provisions. This includes failing to follow plan terms for availability of elective deferral contributions as discussed in IRC 403(b)(12)(A)(ii) and IRC 401(m) as applied to IRC 403(b) plans. See IRC 403(b)(12)(A)(i).

Demographic Failure — a failure to satisfy the requirements of IRC 401(a)(4), IRC 401(a)(26) or IRC 410(b) as applied to IRC 403(b) plans. See IRC 403(b)(12)(A)(i).

Employer Eligibility Failure — an employer that is not a tax-exempt organization described in IRC 501(c)(3) or a public educational organization described in IRC 170(b)(1)(A)(ii) that adopted an IRC 403(b) plan where such employer is not eligible to sponsor such plan.

Operational Failure — means a 403(b) plan’s failure to:

Demographic Failure — a failure to satisfy the requirements of IRC 401(a)(4), IRC 401(a)(26), or IRC 410(b) as applied to IRC 403(b). See IRC 403(b)(12)(A)(i).

Employer Eligibility Failure — any of the following:

Applicant/POA establishes an account on the Pay.gov website.

Applicant/POA refers to the IRS instructions for Form 8950, Application for Voluntary Correction Program (VCP) Submission Under the Employee Plans Compliance Resolution System on the IRS.gov website.

Applicant/POA gathers attachments and documents required by Rev. Proc. 2021-30, Section 11.04, converts them into PDFs, and combines them into a single file that doesn’t exceed 15 MB.

Applicant/POA accesses Pay.gov and finds Form 8950 or they can type https://www.Pay.gov/public/form/start/438392465 into their web browser.

Applicant/POA completes the Form 8950 and uploads the PDF attachments containing the VCP submission documents.

Applicant/POA pays the applicable user fee via a debit/credit card or through a transfer from a checking or saving account.

Pay.gov generates a payment confirmation receipt upon the successful filing of the VCP submission with the Pay.gov tracking ID number serving as the IRS control number for the VCP submission.

Applicant/POA faxes any required VCP submission documents that they couldn’t include in the PDF due to the 15 MB size limitation to the IRS using the number published in Rev. Proc. 2021-30, Section 11.03(7).

Pay.gov website automatically transfers Form 8950 data the next business day to RCCMS.

RCCMS automatically creates a partially-completed RCCMS activity record. It’s in Status 02 and automatically assigned to the FAST Unit’s RCCMS group number.

Beginning with the June 2022 release (Version 3.7.1) RCCMS automatically updates the "Statute" date field by entering a date that is two years from the date in the "Return received" field.

Researches IDRS using the EIN listed on Form 8950. IDRS commands include INOLES, AMDISA using the EIN, the EIN with a "P" and the EIN with a "N" .

Uploads the IDRS research to the "Office Documents" folder within the applicable RCCMS activity record.

Downloads for each electronic submission made via the Pay.gov website: the completed Form 8950, the PDF attachment of VCP submission documents, the general and detailed deposit records from the Pay.gov website and uploads all items to the Office Documents folder within the applicable RCCMS activity record.

Updates the RCCMS status code to 08 and transfers the completed RCCMS record to the Manager of EP VC.

Identifies cases that can be immediately closed as a "Merit Closure" by the preliminary reviewer either immediately with minimal effort, or are ineligible for VCP.

Identifies suitable "Quick Closure" cases that can be closed favorably with minimal effort by individuals other than a preliminary reviewer.

Promptly identifies cases subject to expedited treatment. See IRM 7.2.2.4 (3) for VCP cases subject to expedited treatment.

Assigns VCP cases a grade per IRM 7.11.2, Employee Plans Determinations Letter Program, EP Case Assignment Guide.

Checks the project code. Don’t use project code "0999." The RCCMS project code for VCP cases represent the type of retirement plan reported on Form 8950, item 5. Current VCP case project codes are in Document 6476 and in IRM 7.2.2.6(4).

Ensure that RCCMS activity records are updated to effectively manage case inventory.

Terminating plans, including orphan plan cases.

Any case where the applicant has made a specific request for expedited treatment, provided detailed reasons as to why such request should be granted, and at the discretion of the Manager, EP VC, has been granted.

Grades the VCP case using the grading criteria in IRM 7.11.2, Employee Plans Determinations Letter Program, EP Case Assignment Guide and input the grade into the "Activity grade" field in RCCMS.

Conducts an initial high level review of the VCP case, completes a preliminary review check sheet, and uploads it to RCCMS.

Makes sure there is an entry in RCCMS field relating to the NAICS code if this field is blank. Compare the code entered on Form 8950 to the available NAICS codes in RCCMS and choose the closest appropriate code.

If the user fee payment was dishonored (i.e. retired) or is clearly less than what is owed, the preliminary reviewer will attempt to secure a new payment by soliciting a Form 8951 as discussed in IRM 7.2.2.10.1, Instructions on Soliciting User Fees Owed.

Makes a specific written entry on to the RCCMS Chronology tab indicating that the case has been preliminary reviewed and chooses the appropriate action code. Generally, it’s between "201-Merit Close" or "203-Full Review/Quick Closure" .

For merit closure cases, updates RCCMS by entering appropriate EP VC issue/failure codes in the RCCMS VC Issue grid. Prior to 10/1/2023 up to four issue/failure codes were entered in the closing record via the "Principal issue codes" field within the closing record of the RCCMS case.

For merit closure cases, updates the RCCMS closing record by choosing the appropriate disposal code. Make sure to choose "771-Favorable-Merit (Screeners only)" . Beginning on 10/1/2023, the description of this code was revised to be "771-Favorable-Merit (Source Code 20 cases only)."

For merit closure cases, creates the issued compliance statement and places it into a "Closing Documents" subfolder in the RCCMS Office documents folder.

Checks the plan type entered on Form 8950 plus the resulting project code on RCCMS and verify that it’s accurate based on plan type and type of submission. See Document 6476 and IRM 7.2.2.6(4) for current project codes for VCP cases.

Updates RCCMS to designate whether the case is a "Full review" or "Quick Closure" case or is a "Merit closure" by entering the appropriate classification code to the RCCMS Chronology Tab.

Updates RCCMS to identify cases that have been preliminary reviewed by submitting an update request to change the status code from status 08 to Status 10.

Manager, EP VC assigns cases to preliminary reviewers within 15 days of receiving VCP cases from the FAST unit.

Preliminary reviewers review cases and return them to the Manager, EP VC (i.e. Group 7550) within 10 days of assignment.

Designated employees (usually a EP VC program assistant) must close designated merit closure cases within 10 days from the date the preliminary reviewer identified the case for merit closure and transferred the RCCMS case file back to RCCMS Group 7550.

Program assistant mails Letter 5265, Notification to Applicant that a VCP/VCAP Case needs to be Assigned to a Specialist, to the applicant and their representative, if applicable, informing them that the case has been received by the IRS, placed into unassigned inventory as it can’t be closed on merit and is awaiting assignment to a specialist. It also provides information how the applicant can check on their submission’s current status and includes a link to a special webpage on IRS.gov that provides information on unassigned VCP cases.

You may use "operational time" because it captures more information such as the plan number and distinguishes VCP cases on WebETS.

Your manager may prefer that you use the "Voluntary Compliance" category.

Don’t ever use "other operational time" category. Use "EP Determ Case" as the case type.

Don’t record individual RCCMS cases assigned for preliminary review as discussed in IRM Section 7.2.2.4 and 7.2.2.4.1 on WebETS. Use Activity Code 115 and project code 0999.

Document your discussion and what was agreed upon on the CCR.

Your manager may decide to transfer the case to another specialist.

In the case file.

On the completed preliminary review checklist.

If the box next to "Primary" is checked in the RCCMS Activity record.

If the Primary column shows a "yes" in the RCCMS inventory case listing view.

Cases subject to expedited treatment. See IRM 7.2.2.4 (3).

All other cases (oldest to newest based upon return received date).

IRM 7.2.2.10, Procedures for User Fee Issues.

IRM 7.2.2.10.1, Instructions on Soliciting User Fees Owed, for instructions on soliciting additional user fee.

IRM 7.2.2.10.2, Refund Procedures and Instructions for VCP User Fees, for instructions on the processing of VCP Refunds of paid user fees.

IRM 7.2.2.10.3, User Fee Waiver Requests Involving Terminating Orphan Plans, for procedures for requested fee waivers for terminated orphan plans.

Review the cover letter or narrative in the VCP case file to determine if there’s an indication that the plan paid the user fee.

Review the detailed Pay.gov Deposit Ticket PDF to see if there are indications that the plan paid the user fee.

Discuss with your manager if you see evidence that the plan paid the user fee. If the plan did pay the fee, ensure that the plan sponsor (or some other party) immediately reimburses the plan for the VCP user fees with interest. The VCP submission can’t be further processed until the plan has been reimbursed. Document the discussion and resolution in the CCR, and applicable workpapers.

Check for any IDRS printouts in the case file for any indication of IRS examination activity or problems with the EIN listed on the VCP submission documents. Examination activity will show up on IDRS printouts if a record exists. For additional information on IDRS consult the training PowerPoint slides on IDRS located on the EP VC SharePoint. Contact your manager if you don’t understand the information in the IDRS.

Review any cover letters or attachments to determine if it mentions any IRS examination activity.

Review Form 8950, Application for Voluntary Correction Program (VCP) Submission under the Employee Plans Compliance Resolution System (EPCRS), Line 10. A "Yes" response means that the plan is ineligible for VCP. If there’s no entry, it may indicate examination activity. Secure a replacement page with this question answered.

Review the Form 8950 question about abusive tax avoidance transactions (ATAT). If there’s no entry, it may indicate examination activity. Secure a replacement page with this question answered. If applicable, secure and review submitted attachments from the applicant.

If there’s evidence that the plan or plan sponsor may be "Under Examination," determine whether the examination began before or after the VCP submission’s return received date.

Discuss with your group manager immediately. Document this discussion in the CCR or in your workpapers.

Close the VCP case as ineligible per IRM 7.2.2.3.1, Early Closing for Certain VCP Submissions.

Use Letter 5341.

Issue a full refund of the user fee to the payor. See IRM 7.2.2.10.2, Refund Procedures and Instructions for VCP User Fees.

Signed by an authorized person. See Form 8950instructions, "Who Must Sign," for additional information. There is no pen and ink signature. However, the applicant or a properly authorized representative must sign the form by typing their name and title when completing the form.

Complete and verify that the applicant included all required attachments.

Specific enclosure items listed on Form 14568 or Forms 14568-A through 14568-I.

Detailed sample computations.

Corrective plan amendments.

Prior plan document in effect at the time of the specified qualification failure. For operational failures, taxpayers are permitted to submit relevant portions of the prior plan document.

If the POA or TP indicates that the prior plan document doesn’t exist, is missing or can’t be found, see IRM 7.2.2.29, Missing Prior Plan Document (Relevant Sections), for additional procedures.

Form 8950, Application for Voluntary Correction Program (VCP) Submission under the Employee Plans Compliance Resolution System (EPCRS).

Form 2848, Power of Attorney and Declaration of Representative.

Form 8821, Tax Information Authorization.

Model VCP documents. These documents have been released as official forms.

Form 14568, Model VCP Compliance Statement.

Form 14568-A, Model VCP Compliance Statement - Schedule 1: Interim Nonamender Failures.

Form 14568-B, Model VCP Compliance Statement- Schedule 2: Other Nonamender Failures and Failure to Adopt a 403(b) Plan Timely.

Form 14568-C, (July 2023), Model VCP Compliance Statement- Schedule 3: SEPS and SARSEPs.

Form 14568-D, (July 2023), Model VCP Compliance Statement- Schedule 4: SIMPLE IRAs.

Form 14568-E, Model VCP Compliance Statement- Schedule 5: Plan Loan Failures (Qualified Plans and 403(b) Plans).

Form 14568-F, Model VCP Compliance Statement- Schedule 6: Employer Eligibility Failure (401(k) and 403(b) Plans only).

Form 14568-G, Model VCP Compliance Statement- Schedule 7: Failure to Distribute Elective Deferrals in Excess of the 402(g) Limit.

Form 14568-H, Model VCP Compliance Statement- Schedule 8: Failure to Pay Required Minimum Distributions Timely.

Form 14568-I, Model VCP Compliance Statement- Schedule 9: Limited Safe Harbor Correction by Plan Amendment.

Any narratives or attachments the POA or VCP applicant submitted describing the failures, correction methods and changes to administrative procedures.

Contact your manager if there’s an error to see if you should change the case type.

Update the RCCMS record if the category needs to be changed.

Document your reasons in your workpapers.

Request agreement from your manager.

The applicant or plan sponsor must get an EIN at IRS.gov.

Secure revised VCP documents once the applicant has gotten an EIN.

Update the RCCMS record. Follow IRM 7.2.2.3.2, Procedures to Fix Errors or Make Updates to Key RCCMS Fields.

Defined benefit pension plans, cash balance plans, target benefit pension plans or any hybrid plan with any type of operational failure or plan design failure.

Demographic failures involving coverage and non-discrimination for IRC 401(a)(4) and IRC 410(b). This includes failures involving IRC 401(a)(26).

Any other issue or qualification failure that would require actuarial computations or an actuary’s expertise.

The failure is only about operational failures and doesn’t require a plan amendment.

The original accrued benefit is correct and doesn’t need to be adjusted as part of any reasonable correction; nor are accrued benefits being recalculated.

You and your manager agree that you don’t need to coordinate with an IRS actuary.

You and your group manager get at least one EP VC program coordinator’s written consent.

Manager: Must request the RCCMS case file associated with the pre-submission conference request from the EP VC staff assistant or program assistant.

Specialist: Must review the closed pre-submission conference case file to see what feedback was provided and if the new submission differs from the information that was previously provided to the IRS.

Errors - An error discovered while verifying the correct fee as discussed in IRM 7.2.2.7, VCP Submissions-Initial Review.

Egregious or Intentional Failures - Collect any additional amounts imposed as a sanction payment over any paid VCP user fee via a closing agreement per Rev. Proc. 2021-30, Section 4.10.

SEP or SIMPLE IRA with retention of excess assets - Collect any additional amounts imposed as a sanction payment over any paid VCP user fee via a closing agreement per Rev. Proc. 2021-30, Section 6.11(5)(b).

Group Submission - Collect the additional user fee imposed by Rev. Proc. 2024-4, and subsequent annual updates for group submissions covering more than 20 affected plans. Use Letter 5352, Request for Signature for Group VCP Submission to request the additional user fee.

Reserved.

Additional Amount- The additional fee imposed in lieu of not pursuing additional income tax imposed by IRC 72(t) as allowed by Rev. Proc. 2021-30, Section 6.09(6). The additional amounts are imposed as a sanction payment over any paid VCP user fee via a closing agreement.

Follow the collection procedures in Securing Additional Fees-Procedures in IRM 7.2.2.10.1, Instructions on Soliciting User Fees Owed if an additional user fee is owed for a group VCP submission.

Process sanction payments associated with DO 8-3 closing agreements under different procedures. See IRM 7.2.4.

Get the necessary information from Pay.gov to document the dishonored/retired payment.

Take the necessary steps to upload the Pay.gov information into the RCCMS record.

For unassigned cases, reach out to the applicant/POA and ask them to submit a new payment using Form 8951. If the payment is not immediately made, mark the RCCMS case accordingly and assign the case for a full review.

Instruct the TP/POA to submit a new payment to the IRS via the Pay.gov website using Form 8951 as instructed in IRM 7.2.2.10.1.

Get confirmation from the TP/POA that a new Pay.gov payment has been made.

Wait seven to ten days from the payment date for the designated EP VC employee to send a three-page PDF file that includes detailed Pay.gov payment information and a copy of the submitted Form 8951.

If the TP/POA doesn’t submit a new payment (or is unsuccessful) after repeated inquiries, discuss with your manager within a reasonable period to see if you can close the case as a failure to respond or ineligible case. Follow the procedures in IRM 7.2.2.31, Voluntary Compliance Referrals to EP Examinations and Fraud Referral Procedures. Use Letter 5339, Uncollected Fee-VCP Closing Letter as the closing letter.

The taxpayer name and EIN should be the plan sponsor or other entity making the submission. See "Who May File" on the Form 8950 Instructions.

It needs to be clear as to whether the named representative is entitled to copies of IRS correspondence. That authority is granted in Line 2, if the applicable box(s) located next to first two named representatives is checked. If the box is not checked the representative is not entitled to receive copies of IRS correspondence.

Line 3 (Matters) should be filled out sufficiently to describe the matter covered, as described in IRM 7.2.2.12(7).

The named representative must satisfy the power of attorney requirements in Rev. Proc. 2021-30, Section 11.08 and Rev. Proc. 2024-4, Sections 6.02(11) and (12). An unenrolled return preparer can’t be a power of attorney for any VCP submission.

The representative must sign and date the Form 2848. An original pen and ink signature isn’t required. Photocopies are acceptable.

The Form 2848 must be signed by an officer/owner of the plan sponsor. If the plan sponsor is other than an individual, ensure they include a printed name of an officer/owner, title, and name of business.

The entry for "Description of Matter" should clearly indicate that the representative is appointed to represent the taxpayer in connection with the VCP submission. The matters description doesn't have to refer to Rev. Proc. 2021-30 as long as the correction program is referenced:

Tax Form Number should list "8950." The applicant doesn’t have to list model IRS forms, such as "14568" but if they do, the Form 2848 is still acceptable.

Generally, "Years or Periods column" should be marked with "Not applicable or N/A" as per the Form 2848 instructions. Or, it can include the years, as long as the dates listed correspond to the period of the failures noted in the submission.

If the representative submitted the VCP submission on behalf of the applicant via the Pay.gov website, the Form 2848 must specifically grant that authority. To grant the necessary authority, the box next to line 5a for “Other acts authorized” must be checked and the following description added: "signing and filing of the Form 8950 and accompanying documents as part of a VCP submission."

Line 3 - Acts authorized contains something like "EP Voluntary Closing Agreement Request permitted by Rev. Proc. 2024-4."

Line 3 Tax Form Number and Years or periods should reflect "Not applicable."

The IRS prefers that if they wish to submit information and documents electronically to the IRS that they use secure messaging via Taxpayer Digital Communications (TDC) for case related communications. Encourage them to submit Form 15314, TEGE Secure Messaging Taxpayer Authorization of Disclosure to Designated Users.

Emails sent to the IRS aren’t secure and the IRS can’t guarantee the security of any information in them.

The IRS prefers that they send information by TDC or mail or fax.

Make sure the check box relating to the secure messaging paragraph is checked when preparing Letter 5345 and any other VC letter (Letter 5336, 5346, 5351, 5352 and 5359) where additional information or documents are being requested.

Fax or mail Pub 5295, Secure Messaging for Tax Exempt and Government Entities to the TP/POA along with the applicable VC letter.

Promptly follow-up with a telephone call to see if they are interested in using TDC, to provide the requested information.

Secure a fully completed and signed/dated Form 15314, TEGE Secure Messaging Taxpayer Authorization of Disclosure to Designated Users by fax or mail.

Make sure Form 15314 is completed properly and signed properly by an authorized officer of the plan sponsor consistent with the submitted Form 2848.

Email the completed Form 15314 to *TEGE TDC TP Provisioning.

After the form has been processed sign in to the TDC portal and send the initial welcome message and other applicable items.

If you determine that it’s in the IRS’s and/or the plan sponsor’s best interest, you may prepare a traditional compliance statement. This includes the situations discussed below in IRM 7.2.2.15(8).

Consult with your manager before preparing a traditional compliance statement.

Document your discussion on the CCR.

Material change in fact or issues for which a new penalty of perjury statement hasn’t and won’t be secured. Including additional late amender failures isn’t considered a material change in fact. However, adding new operational failures to an open VCP case is considered a material change in fact.

If plan sponsor/POA may be unaware of or not understand the compliance statement terms and it’s in the interests of both parties that the plan sponsor sign it. Before asking for signature, consult with your manager and document your discussion in the CCR.

Group Submission compliance statements must be signed.

How a failure should be corrected.

Changes to administrative procedures.

Whether a failure has been properly described or is eligible for VCP.

Determination of a VCP user fee.

Requests for limited tax relief made under Rev. Proc. 2021-30, Section 6.09 as discussed in IRM 7.2.2.11, Special Tax Relief Requests.

Fee waiver requests made by terminating orphan plans as discussed in IRM 7.2.2.10.3, User Fee Waiver Requests Involving Terminating Orphan Plans.

Generally, the conference is held via conference call. The applicant or their POA has 21 calendar days after the conference date to submit additional information in support of his/her position.

The taxpayer must request any extension of the 21-day period in writing before it ends, and it must be approved by the group manager.

Depending on specific facts and circumstances, we may accept alternative proposals.

When you evaluate other correction methods, consider if they’re reasonable given the described facts and circumstances.

You may need to get information about the plan sponsor’s current financial conditions to justify a special exception to full correction.

You must consult with your group manager to discuss the merits of other correction methods. When appropriate, consult the Manager, EP VC or the EP VC program coordinators.

Issue a Form 1099-R in the year of correction rather than in the year of the deemed distribution. In VCP, the plan sponsor/POA must request this relief.

Request relief from a deemed distribution’s income tax consequences. The IRS will approve this relief in appropriate circumstances if the plan sponsor complies with all of the requirements in Rev. Proc. 2021-30, Section 6.07.

Sample computations showing original loan terms, but new amortization schedules aren’t included with the submission.

Sample computations and correction narrative don’t explicitly state how the loan failure is being corrected.

For defaulted loans, narrative and sample computations don’t indicate that missed interest is included in the re-amortized amount.

For regular loans not used to purchase a principal residence, the re-amortized loan period exceeds the five year period measured from when the plan lent the money to the plan participant.

There is evidence that the participant loans weren’t bona fide loans as evidenced by a lack of a signed loan agreement(s), or no real intent that the plan participants would repay the loans.

Loans to owner employees or HCE participants require strict scrutiny if the HCE is responsible for ensuring the loans satisfy the requirements for a bona fide loan.

Affected loans greatly exceed the maximum loan amount specified by IRC 72(p)(2).

Authorized by Rev. Proc. 2021-30, Section 4.05 or earlier EPCRS revenue procedures.

Permitted under VCP or Audit CAP. It’s also generally available under SCP to fix operational failures where participants or beneficiaries received additional benefits not authorized by plan terms as described in Rev. Proc. 2021-30, Section 4.05 and Appendix B, Section 2.07.

Only applies to 403(b) plans failures in 2009 and later. Before 2009, there was no written plan requirement under the IRC nor was there a requirement to follow the terms of a IRC 403(b) written plan even if one existed.

Determine if an IRC 401(a) qualified retirement plan (and for 2009 and later years, a IRC 403(b) plan) is permitted to provide the additional benefits.

Determine if the amendment would violate IRC 411(d)(6). Allowing some plan participants, including terminated plan participants to retain excess contributions/allocations in a defined contribution plan may violate IRC 411(d)(6) in some circumstances because had the plan sponsor followed the plan’s written terms when operating the plan, other participants would’ve received higher allocations or additional benefits.

If the affected plan participants are subject to a collectively bargained agreement, be sure there is evidence in the case file indicating that the union consents to the adoption of the corrective amendment.

Determine if the corrective amendment is non-discriminatory as permitted by IRC 401(a)(4). If HCEs are benefiting, secure additional information to determine if the corrective amendment is non-discriminatory, such as detailed: benefits/rights or features demonstration, general test, or IRC 401(a)(26) participation test. For amendments impacting the plan’s definition of compensation, you may need to secure a demonstration that it doesn’t favor the HCE if the plan is using an alternative definition that falls outside of the safe harbors Treas. Reg. 1.414(s)-1.

When evaluating a corrective plan amendment and related general test or average benefits test or participation test, confirm that the plan doesn’t use short service employees to pass these tests. Refer to the EP VC SharePoint for the October 22, 2004, Memorandum from the Director of Employee Plans.

For DB plans - ask about the plan’s funding status. Ask for the most recent Adjusted Funding Target Attainment Percentage (AFTAP) certification in effect at the time of correction to determine if the plan’s funding ratio is below 80%. IRC 436 may prohibit any retroactive plan amendments that increase participant benefits or allow for certain restrictive payments.

Reject the amendment if it doesn’t comply with IRC 411(d)(6), and ask the TP/POA to propose an alternative correction method that is consistent with EPCRS correction principles. However, we may deem the correction acceptable under the EPCRS revenue procedure if the plan sponsor can establish that the plan’s written terms were drafted incorrectly.

If the plan sponsor states the plan document was drafted incorrectly, review the file to determine if the applicant has established, through clear and convincing evidence, employer intent and employee expectations for the way the plan would be administered.

For a governmental plan or IRC 403(b) plan, see IRM 7.2.2.19, Correction by Retroactive Amendment to Resolve Operation Failures, section 3B.

Present and former SPD documents.

Present and former employee handbooks.

Present and former versions of the plan document and amendments.

If affected plan participants are subject to collective bargaining, copies of the signed and dated collectively bargaining agreements that were in effect during the period of failure.

Letters to actuaries, accountants, TPAs, lawyers about the plan’s design and operation.

Past emails or memos to employees about plan benefits.

Employment offer letters.

Additional documents that help establish employer intent and employee expectations such as: PowerPoint presentations given to employees, employee newsletters, enrollment forms or benefit distribution forms, or plan highlights or other written documents distributed to plan participants.

Any actuarial issues involving DB plans.

Correction methods for any plan type which use the IRC 410(b) average benefits test, or the general test allowed by IRC 401(a)(4), or an IRC 401(a)(26) participation test to correct any operational or demographic failures.

Specialist: Complete the Proposed Correction Via Retroactive Amendment form and email it along with any necessary attachments to your manager if you determine the amendment should be approved.

Manager: Review the form and attachments. Indicate whether the correction proposal should be approved or denied. If the proposal is denied, be sure to explain why the amendment was not approved and return the signed form to the specialist. Generally, a new correction proposal will be needed if the corrective amendment is not approved because it failed to satisfy the requirements of Rev. Proc. 2021-30, Section 4.05.

If corrective amendment appears to result in the appearance of an IRC 411(d)(6) cutback, but the manager and specialist determine the amendment should be approved because of facts and circumstances as permitted above in IRM 7.2.2.19(4) and IRM 7.2.2.19(5), an EP VC program coordinator must be consulted and they must also sign the form before it’s returned to the specialist.

Manager: Check the appropriate box on the form indicating the possible appearance of a IRC 411(d)(6) cutback. Email the signed form and applicable attachments to the appropriate EP VC program coordinator in order to obtain 2nd level approval.

EP VC program coordinator: The EP VC program coordinator reviews the form and included attachments. If they agree that the amendment should be approved, they will sign and date the form and return it to the group manager and the specialist. If the EP VC program coordinator determines the amendment should not be approved they will mark and sign the form indicating the correction proposal was not approved. An explanation for the denial will be listed on the form.

Specialist: Upload the signed form to the RCCMS case file.

Provide a copy of the Attachment A listing to your group manager.

The group manager contacts the Manager, EP VC and the EP VC staff assistant to request help with an IDRS check to see if the disclosed EINs are valid and if there is examination activity involving the plan sponsors and plans listed on Attachment A.

The EP VC staff assistant conducts the necessary research on IDRS using the generalized IDRS interface application -EICTRAA (GII-EICTRA).

If the information on Attachment A is inaccurate or if there is examination activity involving any company listed on Attachment A or any of its retirement plans, it’s possible they can’t be party to the group VCP compliance statement as they are ineligible for VCP. See Rev. Proc. 2019-19, Section 5.08. If either problem occurs, the specialist must secure a revised Attachment A.

EP VC can’t close the group submission case until this IDRS check is performed, and if necessary, a revised replacement Attachment A is associated with the group compliance statement.

Determine if the proper number of submissions have been made.

Determine if the group submission satisfies the group submission eligibility requirements.

Make sure that the submission does not pertain to any IRC 457(b) plans.

The applicant should make additional submissions or made too many related group submissions.

The group submission doesn’t satisfy the group submission requirements.

If the minimum fee was not fully paid, collect any amounts owed as soon as possible.

If the minimum fee was not paid at all, consider not processing the submission unless there are indications of unique circumstances.

If (a) or (b) applies, discuss with your manager before taking any action.

If more than $10,000 was submitted, determine that the amount submitted is the appropriate user fee for the group submission.

Follow IRM 7.2.2.10.1, Instructions on Soliciting User Fees Owed, to collect initial owed user fee.

The group submission compliance statement must include a narrative and listing that clearly shows which specific failures apply to the employers/plans.

If using the sample group submission compliance statements on the EP VC SharePoint site, this information would be part of a modified Attachment A or a separate attachment (for example, Attachment B).

Share the draft with the POA/eligible organization and request their comments or approval.

If the POA/eligible organization accepts the draft document, mail, or fax one copy to the eligible organization for signature along with Letter 5352, Request for Signature for Group VCP Submission.

Get the required certifications, listing of participating employers, if not already provided, and collect the additional owed user fee via Letter 5352. See Rev. Proc. 2021-30, Section 10.11.

Give your manager a copy of the Attachment A listing.

Group manager: contact the Manager, EP VC and the EP VC staff assistant to request help with an IDRS check to see if there’s examination activity for the plan sponsors and plans listed on Attachment A.

If IDRS shows examination activity for any company listed on Attachment A or any of their retirement plans, they may not be party to the group VCP compliance statement because they are ineligible for VCP. See Rev. Proc. 2021-30, Section 5.08. If it occurs, the specialist must secure a revised Attachment A.

Specialist: Do not close the group submission case until this IDRS check is performed, and if necessary, include a revised replacement Attachment A with the group compliance statement compliance that we issue.

Create a subfolder in the RCCMS Office Documents folder to store the closing letters, issued compliance statement and address documents. Name this subfolder “Closing Documents.”

Prepare a VCP closing letter for the taxpayer and POA or individual listed on Form 8821, if applicable. Closing letter types are described more fully in IRM 7.2.2.25, Required Use of Standardized VC Letters, on the required use of standardized official IRS letters.

Do not date the closing letters or compliance statements. Make sure the typed name and signature of the current Manager, EP VC is on the letter and the compliance statement.

Use Letter 5353 for VCP cases closed favorably with or without a refund. There are several no action letters for cases not closed favorably. (IRM 7.2.25).

Prepare and upload a MS Word document or PDF to the RCCMS case record that contains the mailing address for the applicant and POA or individual listed on Form 8821, if applicable.

Upload closing letters and compliance statement to the RCCMS record and place them in the “Closing Documents” subfolder in Office Documents.

The initial fee paid.

Subsequent VCP user fees collected or sanctions if a closing agreement.

Refunds requested.

Dishonored or retired payments.

Closing Letter to VCP applicant (generally Letter 5353).

Closing Letter 937-A to POA or individual listed on Form 8821, if applicable.

Compliance statement (Form 14568 series or a drafted streamlined or traditional).

Referenced attachments, if using a model or streamlined compliance statement.

Address sheet/label for large windowed envelopes.

Follow the naming convention described in IRM 7.2.2.17.2, Mandatory RCCMS Naming Convention for EP VC Cases.

Place all closing documents into a Closing Documents subfolder.

Use file names that make sense and inform the user as to what the file is by looking at its name, consistent with naming convention for EP VC cases.

Consider creating sub-folders in the Office Documents folder to help organize the non closure files and material in the submission.

Click on “Issue” located on the left side of the specified RCCMS case to open the grid.

Click on the first row, first column and click on space for “Activity” and chose the default which is the name of the activity. This needs to be done for each failure being entered.

Go to the 2nd column and click on the space for “VCP/VCAP Issue Code”. Choose the appropriate issue code from the drop down menu. Do this for every disclosed failure which is covered by the compliance statement.

Go the 3rd column and click on the space for “Correction Fully Completed”. Choose “Yes” if the failure has been fully corrected by the plan sponsor at the time the case is being closed. Choose “No” if additional actions by the plan sponsor are needed to fully correct the failure within the 150 day correction period. Use “N/A” for those rare cases, likely VCAP, where a “Yes” or “No” response is not appropriate.

Go the 4th column and click on the space for “Plan Amendment Fixes Failure”. Choose “YES” if the adoption of a plan amendment is part of the approved correction methodology. Otherwise choose “No”.

Go the 5th column and click on the space for “Appearance of an IRC 411(d)(6) Cutback”. Choose “Yes” if the original correction proposal would appear to show that plan participants would be getting less benefits than what was specified by the plan’s original terms. Yes applies even if the correction was ultimately approved. Otherwise, choose “No”.

Repeat steps (b) through (f) for each failure. An unlimited number of failures can be entered.

Save the entries you have made to the Issue data grid.

The case can’t be closed unless there is at least one failure entered and none of the columns can be left blank.

Monitor your RCCMS inventory and look for cases in Status 51 with pending closing requests. Accept them as soon as possible.

Generally, within ten business days of receiving a RCCMS VCP case file for closing, issue the compliance statement and closing letters and update RCCMS or, if the case is not ready for closure, send the case back to the specialist via RCCMS.

Upload applicable files to RCCMS and do a final close via RCCMS update on the same date.

Review the case file, including the RCCMS closing record, Issue data grid, applicable RCCMS activity screens, the closing letters, retroactive amendment approval form, and compliance statements to determine if the VCP case is ready for closure.

Return the VCP case to the specialist for correction or further development if there are errors or the case was not properly developed. Document the reasons for the return by updating the CCR as instructed by IRM 7.2.2.6.1(2)(a).

Address and correct errors in the compliance statement or closing letters before final close on RCCMS.

Sign and date the compliance statements and closing letters. If missing, add the printed name and signature of the Manager, EP VC.

Promptly mail one approved compliance statement plus applicable closing letters to the VCP applicant and copies to the POA or designated individual listed on Form 8821, if applicable. Upload one set of the signed and dated documents to the RCCMS case’s Office Documents folder.

Update RCCMS and close the case off the system by clicking on the "Actions" button and choosing "Final Close." Update the status code to 90- Final Close.

Is in writing to a group manager or specialist before the end of the 150-day correction period in the issued compliance statement.

Explains why the extension is needed and specifies the amount of additional time sought.

Contact the Manager, EP VC’s staff assistant to get the closed case file from RCCMS.

If possible, review the request in consultation with the specialist who worked the case.

The extension request exceeds six months.

The TP/POA requests a second extension.

Issue Letter 5356, VCP Letter That Extends the 150-day Correction Period extending the 150-day correction period.

Contact the staff assistant to the Manager, EP VC to upload a copy of the issued Letter 5356 to the closed RCCMS VCP case.

EP VC will fax a copy of the issued compliance statement to EP Determinations for VCP submissions with a received date before 1/1/2017, associated with a determination letter application required by the EPCRS revenue procedure.

EP Determinations and EP Examinations should contact EP VC if they determine that an open or closed VCP submission is ineligible due to the plan sponsor or plan being "Under Examination" at the time of the VCP filing. "Under Examination" is defined in Rev. Proc. 2021-30, Section 5.

EP Determinations or EP Examinations may, with the plan sponsor’s consent, contact EP VC to get information about a past submission if a plan sponsor has lost, misplaced, or never received a copy of their compliance statement.

EP Determinations specialists: Send an email to their manager which contains the name of the plan, name of the employer/plan sponsor, employer identification number, and plan number asking to verify the filing of the VCP submission with EP VC.

EP Determinations group managers forwards the email to the Manager, EP VC’s staff assistant along with a copy to the Manager, EP VC and requests verification of the VCP filing as well as the name of the EP VC specialist assigned to the case and RCCMS work unit number assigned to the submission.

The EP VC staff assistant or administrative assistant checks RCCMS and provides the requested available information. If the case is not assigned to an EP VC specialist at the time of the inquiry they will disclose that information to the EP Determinations group manager.

EP Determinations specialists: Contact the EP VC specialist assigned to the VCP case via email. Ask the specialist to confirm the late amender failures disclosed in the VCP case and the date those late amendments were adopted.

EP VC specialist: Provide a written response via email based upon the information in the RCCMS VCP case file.

The corrective amendment would otherwise be permitted per the rules for pre-approved plans; and

The plan sponsor hasn’t made any other modifications to the pre-approved plan that would cause the plan to lose its reliance on the opinion or advisory letter.

Ask your manager to contact the pre-approved plan coordinators and ask whether the corrective amendment is permitted for pre-approved plans.

Document the response and the coordinator’s name who responded in your case file.

If the amendment is acceptable to the pre-approved plan coordinators, include a caveat on the compliance statement in the enforcement section. See Form 14568 for sample language for this enforcement caveat.

If the corrective amendment is for an operational failure or demographic failure, it must also satisfy Rev. Proc. 2021-30. If this document is missing, the VCP submission is incomplete.

Check all appropriate IRS records, including EDS and IDRS to determine if there is evidence of a prior plan document or issued determination letter.

Consider it resolved if you find evidence for VCP processing purposes even though you don’t have an actual document.

Old financial statements in the name of the plan or trust.

Forms 5500. IDRS command code EMFOLI lists filed Forms 5500 for an EIN and plan number.

Old correspondence to employees.

Old annual plan statements issued to individual plan participants.

Correspondence with legal advisors and past TPAs.

An IRS Employee Plans favorable examination closing letter.

Gets the Manager, EP VC’s written permission.

Asks the Manager, EP VC’s staff assistant to pull the closed case from the RCCMS Library.

Applicant doesn’t timely provide requested information needed to bring the submission to resolution - Section 10.07(4).

IRS and plan sponsor can’t agree - Section 10.07(7).

Applicant doesn’t return a signed compliance statement to the IRS (and any owed user fee) within 30 days of request - Section 10.07(8).

Plan sponsor doesn’t timely begin the corrections and the administrative procedures required by the compliance statement - Section 10.07(11).