IRS Updates Model VCP Compliance Statement

The IRS has updated Form 14568, the Model VCP Compliance Statement, used in the IRS’s Voluntary Correction Program (VCP) for correcting retirement plan qualification failures. Form 14568 serves as a guide for VCP applicants to ensure that they provide all of the necessary information, including descriptions of the failures and proposed correction methods, proposed procedures for notifying former employees and beneficiaries of the correction (when needed), and proposed changes to plan administrative procedures. In addition to Form 14568, the IRS also offers nine Form 14568 schedules that can be used to describe certain common qualification failures and their standardized correction methods. The IRS encourages, but does not require, use of the Form 14568 series by plan sponsors submitting corrections for IRS approval under VCP.

Relatively few changes have been made to Form 14568. The updated form describes a special timing rule for governmental plans to adopt required corrective plan amendments. While corrections generally must be completed within 150 days after the date of the compliance statement, the special rule allows governmental plans additional time to adopt required amendments at a legislative session following the compliance statement date. References to VCP guidance have been updated as necessary—outdated revenue procedures have been deleted and currently applicable guidance has been added—and references to optional amendments and an obsolete pre-2017 rule have been eliminated. Form 14568‑A (Model VCP Compliance Statement—Schedule 1: Interim Nonamender Failures) has also been updated with similar revisions.

EBIA Comment: The Form 14568 series and related forms can be found on the IRS Correcting Plan Errors—Fill-in VCP Forms webpage. VCP submissions must be made electronically, using Form 8950 (see our Checkpoint article). Plan sponsors and advisors submitting corrections under VCP should be sure to follow the electronic filing and other submission requirements in Revenue Procedure 2019-19, which sets forth current procedures under the Employee Plans Compliance Resolution System (EPCRS) (see our Checkpoint article), along with other technical requirements which may change periodically and are detailed on the Pay.gov website (see our Checkpoint article). For more information, see EBIA’s 401(k) Plans manual at Sections XXXIV (“Correcting Plan Mistakes: Identifying and Fixing Common Errors”) and XXXV (“Correcting Plan Mistakes: IRS’s EPCRS”).

Contributing Editors: EBIA Staff.