IRS Updates VCP for Plan Sponsors Ineligible to Sponsor SIMPLE IRA

The IRS on July 22 updated the Voluntary Compliance Program for plan sponsors that are ineligible to sponsor a SIMPLE IRA plan. More specifically, they have updated the VCP Submission Kit. 

Plan sponsors may use the VCP Submission Kit if they are ineligible to sponsor a SIMPLE IRA plan because either they have too many employees or they maintain another type of retirement plan. The IRS says that a plan sponsor should include the following in a VCP submission:

1. Form 14568, Model VCP Submission Compliance Statement. This form is a model compliance statement. The attachments provide explanations of the failure, how it will be corrected, and what steps will be taken to make sure it will not be repeated. 
2. Form 14568-D, Schedule 4, SIMPLE IRAs. This form describes the failure and how it’s been corrected. 
3. The applicable SIMPLE plan document in effect at the time of the failure. This could be an IRS form document such as Form 5304-SIMPLE or Form 5305-SIMPLE, or a prototype a financial institution developed.
4. If applicable, complete: Form 2848, Power of Attorney and Declaration of Representative or Form 8821, Tax Information Authorization. 

The IRS notes that all completed documents must be converted to PDF documents, and all documents must be converted into a single PDF file. If the combined file exceeds 15MB, some documents must be removed so it does not exceed the limit.  The IRS says that the documents that could not be included in the combined PDF file can be faxed to it at 855-203-6996.

Making VCP Submissions 

VCP submissions must be made electronically on Pay.gov; in addition, a user fee must be paid by the employer that sponsors the retirement plan that needs to be corrected using VCP. The applicable user fee is based on the total amount of assets in your plan; a  VCP fee schedule is here.

After a submission is made, the IRS: 

• Reviews the VCP submission for completeness.
• Assigns a complete VCP submission to a specialist for review. They will contact the plan sponsor (and its authorized representative, if applicable) by mail or phone with any questions.
• On approval, sends the applicant a signed version of the Model Compliance Statement you submitted (Form 14568 and incorporated attachments). This document is the VCP compliance statement. The IRS will send the compliance statement four to six months after the submission is made.