Editor's Note: This revenue procedure has been modified by Rev. Proc. 2002-35 (click) with respect to GUST non-amenders who file by September 3, 2002.

Revenue Procedure 2001-17

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Other parts of this Revenue Procedure:
Table of Contents 1 2 3 4 5 6 7 a b c

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PART V. VOLUNTARY CORRECTION PROGRAM WITH SERVICE APPROVAL (VCP)

SECTION 10. VCP GENERAL PROCEDURES

.01 VCP requirements. The requirements of this section 10 are satisfied with respect to failures submitted in accordance with the requirements of this section 10 if the Plan Sponsor pays the compliance fee required under section 12 and implements the corrective actions and satisfies any other conditions in the compliance statement described in section 10.07.

.02 Identification of failures. VCP is not based upon an examination of the plan by the Service. Only the failures raised by the Plan Sponsor or failures identified by the Service in processing the application will be addressed under the program, and only those failures will be covered by the program. The Service will not make any investigation or finding under VCP concerning whether there are failures.

.03 Effect of VCP submission on examination. Because VCP does not arise out of an examination, consideration under VCP does not preclude or impede (under section 7605(b) or any administrative provisions adopted by the Service) a subsequent examination of the Plan Sponsor or the plan by the Service with respect to the taxable year (or years) involved with respect to matters that are outside the compliance statement. However, a Plan Sponsor's statements describing failures are made only for purposes of VCP and will not be regarded by the Service as an admission of a failure for purposes of any subsequent examination.

.04 No concurrent examination activity. Except in unusual circumstances, a plan that has been properly submitted under VCP will not be examined while the submission is pending. This practice regarding concurrent examinations does not extend to other plans of the Plan Sponsor. Thus, any plan of the Plan Sponsor that is not pending under VCP could be subject to examination.

.05 Submission of determination letter application for plan amendments. In any case in which correction of a Qualified Plan failure includes correction of a Plan Document Failure or correction of an Operational Failure by plan amendment as permitted under section 4.06, other than adoption of an amendment designated by the Service as a model amendment or a standardized or prototype plan, the Plan Sponsor should submit a copy of the amendment, the appropriate application form (i.e., Form 5300 series or Form 6406), and the appropriate user fee concurrently and to the same address as the VCP submission.

.06 Processing of submission. (1) Screening of submission. Upon receipt of a submission under VCP, the Service will review whether the eligibility requirements of section 4 and the submission requirements of section 11 are satisfied. If the Service determines that a VCP submission is seriously deficient, the Service reserves the right to return the submission, including any compliance fee, without contacting the Plan Sponsor.

(2) Review of submission. Once the Service determines that the submission is complete under VCP, the Service will consult with the Plan Sponsor or the Plan Sponsor's representative to discuss the proposed corrections and the plan's administrative procedures.

(3) Additional information required. If additional information is required, a Service representative will generally contact the Plan Sponsor or the Plan Sponsor's representative and explain what is needed to complete the submission. The Plan Sponsor will have 21 calendar days from the date of this contact to provide the requested information. If the information is not received within 21 days, the matter will be closed, the compliance fee will not be returned, and the case may be referred to Employee Plans Examinations. Any request for an extension of the 21-day time period must be made in writing within the 21-day time period and must be approved by the Service (by the applicable group manager).

(4) Additional failures discovered after initial submission. (a) A Plan Sponsor that discovers additional, unrelated Qualification or 403(b) Failures after its initial submission may request that such failures be added to its submission. However, the Service retains the discretion to reject the inclusion of such failures if the request is not timely, for example, if the Plan Sponsor makes its request when processing of the submission is substantially complete.

(b) If the Service discovers an unrelated Qualification or 403(b) Failure while the request is pending, the failure generally will be added to the failures under consideration. However, the Service retains the discretion to determine that a failure is outside the scope of the voluntary request for consideration because it was not voluntarily brought forward by the Plan Sponsor. In this case, if the additional failure is significant, all aspects of the plan may be examined and the rules pertaining to Audit CAP will apply. (See sections 13 and 14.)

(5) Conference right. If the Service initially determines that it cannot issue a compliance statement because the parties cannot agree upon correction or a change in administrative procedures, the Plan Sponsor (generally through the Plan Sponsor's representative) will be contacted by the Service representative and offered a conference with the Service. The conference can be held either in person or by telephone, and must be held within 21 calendar days of the date of contact. The Plan Sponsor will have 21 calendar days after the date of the conference to submit additional information in support of the submission. Any request for an extension of the 21-day time period must be made in writing within the 21-day time period and must be approved by the Service (by the applicable group manager). Additional conferences may be held at the discretion of the Service.

(6) Failure to reach resolution. If the Service and the Plan Sponsor cannot reach agreement with respect to the submission, all aspects of the plan may be examined, and the Service may refer the submission to Employee Plans Examinations.

(7) Issuance of compliance statement. If agreement is reached, the Service will send to the Plan Sponsor an unsigned compliance statement specifying the corrective action required. Within 30 calendar days of the date the compliance statement is sent, a Plan Sponsor must sign the compliance statement and return it and any compliance fee required to be paid at the time that the compliance statement is signed (see sections 11.05 and 11.06 regarding timing of payment of compliance fee). The Service will then issue a signed copy of the compliance statement to the Plan Sponsor. If the Plan Sponsor does not send the Service the signed compliance statement (with the compliance fee) within 30 calendar days, the plan may be referred to Employee Plans Examinations for examination consideration.

(8) Timing of correction. 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 advance and in writing and must be approved by the Service.

(9) Modification of compliance statement. Once the compliance statement has been issued (based on the information provided), the Plan Sponsor cannot request a modification of the compliance terms except by a new request for a compliance statement. However, if the requested modification is minor and is postmarked no later than 30 days after the compliance statement is issued, the compliance fee for the modification will be the lesser of the original compliance fee or $1,250.

(10) Verification. Once the compliance statement has been issued, the Service may require verification that the corrections have been made and that any plan administrative procedures required by the statement have been implemented. This verification does not constitute an examination of the books and records of the employer or the plan (within the meaning of section 7605(b)). If the Service determines that the Plan Sponsor did not implement the corrections and procedures within the stated time period, the plan may be referred to Employee Plans Examinations for examination consideration.

.07 Compliance statement. (1) General description of compliance statement. The compliance statement issued for a VCP submission addresses the failures identified, the terms of correction, including any revision of administrative procedures, and the time period within which proposed corrections must be implemented, including any changes in administrative procedures. The compliance statement also provides that the Service will not treat the plan as failing to satisfy the applicable requirements of the Code on account of the failures described in the compliance statement if the conditions of the compliance statement are satisfied. Where current procedures are inadequate for operating the plan in conformance with the applicable requirements of the Code, the compliance statement will be conditioned upon the implementation of stated administrative procedures. The Service may prescribe appropriate administrative procedures in the compliance statement.

(2) Compliance statement conditioned upon timely correction. The compliance statement is conditioned on (i) there being no misstatement or omission of material facts in connection with the submission and (ii) the implementation of the specific corrections and satisfaction of any other conditions in the compliance statement.

(3) Authority delegated. Compliance statements (including any waiver of the excise tax under section 4974) are authorized to be signed by Area Managers reporting to the Director, Employee Plans Examinations, and managers within Employee Plans Rulings and Agreements, under the Tax Exempt and Government Entities Operating Division of the Service.

.08 Effect of compliance statement on examination. The compliance statement is binding upon both the Service and the Plan Sponsor or Eligible Organization with respect to the specific tax matters identified therein for the periods specified, but does not preclude or impede an examination of the plan by the Service relating to matters outside the compliance statement, even with respect to the same taxable year or years to which the compliance statement relates.

.09 Processing of determination letter applications not submitted under VCP. (1) The Service may process a determination letter application submitted under the determination letter program (including an application requested on Form 5310) concurrently with a VCP submission for the same plan. However, issuance of the determination letter in response to an application made on a Form 5310 will be suspended pending the closure of the VCP submission.

(2) A submission of a plan under the determination letter program does not constitute a submission under VCP. Thus, a Plan Sponsor that discovers a Qualification Failure in its plan must make a separate application under VCP. If the failure is discovered by the Service in connection with a determination letter application, the agent may issue a closing agreement with respect to the failures identified or, if appropriate, refer the case to Employee Plans Examinations. In either case, the fee structure in section 12, applicable to VCP, will not apply. Instead, the fee structure in section 14 relating to Audit CAP will apply. (See sections 13 and 14.)

.10 Special rules relating to VCO. (1) Under VCP, Operational Failures in a Qualified Plan may be corrected under the VCO rules in this subsection. VCO is available only if the plan's identified failures are all Operational Failures and only if the plan has a Favorable Letter.

(2) If the plan is not the subject of a Favorable Letter, or if the submission either includes a failure other than an Operational Failure or includes an egregious failure described in section 4.09, the submission will be converted from a submission under VCO to a submission under the VCP general procedures. The compliance fee will be retained and will be applied to the compliance fee required under the VCP general procedures. The Service retains the discretion to determine whether a submission is outside the scope of the special VCO rules even if the identified failures are Operational Failures and the plan has a Favorable Letter. The discretion will be applied only in rare and unusual circumstances.

(3) Reliance on any compliance statement issued for a plan initially adopted or effective after December 7, 1994, other than an adoption of a master or prototype or regional prototype plan, is conditioned upon the plan being timely submitted for a determination letter within the plan's remedial amendment period under section 401(b).

.11 Special rules relating to VCS. (1) Under VCO, certain Operational Failures in a Qualified Plan may be corrected under the VCS rules in this subsection. VCS is available only if the plan's only identified Operational Failures are failures addressed in Appendix A or Appendix B of this revenue procedure and the failures are corrected in accordance with an applicable correction method set forth in Appendix A or Appendix B. Appropriate correction must be made for any Qualification Failure that results from the application of a VCS correction.

(2) The correction methods set forth in Appendix A and Appendix B are strictly construed and are the only acceptable correction methods for failures corrected under VCS. If the Plan Sponsor wishes to modify a correction method provided in Appendix A or Appendix B or to propose another method, the Plan Sponsor may not use VCS, but may request a compliance statement under the VCO procedure.

(3) VCS is not available if the Plan Sponsor has identified more than two failures in a single VCS request. If there are one or two failures that can be corrected under VCS and there are other failures that cannot be corrected under VCS, VCS is not available. The Service reserves the right to shift requests for consideration under VCS into VCO if the Plan Sponsor submits a second VCS request with respect to the same plan while the first VCS request is being considered or during the 12 months after the first VCS compliance statement is issued. Both VCS requests may be shifted into VCO if the first VCS request is still being considered.

(4) The Service will review a VCS request within 120 days of the date the submission is received and determined to be complete. If the Service determines that the request is acceptable, the Service will issue a compliance statement on the Plan Sponsor's proposed correction.

.12 Special rules relating to Anonymous (John Doe) Submission Procedure. (1) The Service has established an Anonymous Submission Procedure that permits submission of a Qualified or 403(b) Plan under VCP without initially identifying the plan or the Plan Sponsor. Only failures other than those addressed in Appendix A and Appendix B may be submitted under this procedure. A plan is not eligible for the Anonymous Submission Procedure with respect to a failure that was submitted under the Anonymous Submission Procedure within the preceding two years. The requirements of this revenue procedure relating to VCP, including sections 10, 11, and 12, apply to these submissions. However, information identifying the plan or the Plan Sponsor may be redacted. Once the Service and the plan representative reach agreement with respect to the submission, the Service will contact the plan representative in writing indicating the terms of the agreement. The Plan Sponsor will have 21 calendar days from the date of the letter of agreement to identify the plan and Plan Sponsor. If the Plan Sponsor does not submit the identifying material within 21 calendar days of the letter of agreement, the matter will be closed and the compliance fee will not be returned.

(2) Notwithstanding section 10.04, until the plan and Plan Sponsor are identified to the Service, a submission under this subsection does not preclude or impede an examination of the Plan Sponsor or its plan(s). Thus, a plan submitted under the Anonymous Submission Procedure that comes Under Examination prior to the date the plan and Plan Sponsor identifying materials are received by the Service will no longer be eligible for either the Anonymous Submission Procedure or VCP.

(3) Unless otherwise extended, the Anonymous Submission Procedure will not apply to applications submitted after December 31, 2002.

.13 Special rules relating to VCT. A VCP submission for a 403(b) Plan is required to be made under the VCT procedure. A VCT submission is subject to the procedures of sections 10 and 11. A 403(b) Plan is not eligible for VCO or VCS.

.14 Special rules relating to VCGroup. (1) General rules. An Eligible Organization may submit a VCP request for a Qualified Plan or a 403(b) Plan under the VCGroup procedure under this subsection and may not submit an application under VCO, VCS, VCT, or the Anonymous Submission Procedure. VCGroup applies if (a) the failures are all Operational Failures and the Eligible Organization is an Eligible Organization defined in sections 10.14(2)(b) or (c), or (b) the failures are all Plan Document Failures and the Eligible Organization is a Sponsor as defined in section 10.14(2)(a).

(2) Eligible Organizations. For purposes of VCGroup, the term Eligible Organization means either (a) a Sponsor (as that term is defined in section 4.09 of Rev. Proc. 2000-20 2000-1 C.B. 553) of a master or prototype plan that (i) receives an opinion letter that considers the provisions of GUST, or (ii) has received an opinion letter that considers TRA '86 and has been submitted for a GUST opinion letter by December 31, 2000, (b) an insurance company or other entity that has issued annuity contracts or provides services with respect to assets for 403(b) Plans, or (c) an entity that provides its clients with administrative services with respect to Qualified Plans or 403(b) Plans. An Eligible Organization is not eligible for VCGroup unless the submission includes a failure resulting from a systemic error involving the Eligible Organization that affects at least 20 plans. If, at any time before the Service provides an unsigned compliance statement, the number of plans that have the same failure falls below 20, the Eligible Organization must notify the Service that it is no longer eligible for VCGroup (and the compliance fee will be retained).

(3) Special VCGroup procedures. (a) A VCGroup submission is subject to the same procedures as any VCP submission in accordance with sections 10 and 11, except that the Eligible Organization is responsible for performing the procedural obligations imposed on the Plan Sponsor under sections 10 and 11.

(b) When an Eligible Organization under VCGroup receives an unsigned compliance statement on the proposed correction and agrees to the terms of the compliance statement, the Eligible Organization must return to the Service within 120 calendar days not only the signed compliance statement and any additional compliance fee under section 12.06, but also a list containing (i) the employers' tax identification numbers for the Plan Sponsors of the plans to whom the compliance statement may be applicable and (ii) the plans by name, plan number, type of plan, number of plan participants, and trust's tax identification numbers, if applicable, along with (iii) a power of attorney (which may be a limited power of attorney) from each of the Plan Sponsors authorizing the Eligible Organization or its representative to act on the Plan Sponsor's behalf with respect to the items in the compliance statement and (iv) a copy of the most recently filed Form 5500 series return for each plan. Only those plans for which correction is actually made within 240 calendar days of the date of the signed compliance statement (or within such longer period as may be agreed to by the Service at the request of the Eligible Organization) will be covered by that statement.

(c) Notwithstanding section 10.04, until the Eligible Organization provides the Service with the information of section 10.14(3)(b)(i) through (iv) with respect to a Plan Sponsor and its plan(s), a VCGroup submission does not preclude or impede an examination of the Plan Sponsor or its plan(s).

(4) VCGroup implementation. The VCGroup procedure is being implemented on a provisional basis, and the Service and Treasury invite comments on the operation of the VCGroup procedure. While the Anonymous Submission Procedure is not available in connection with the VCGroup procedure, Eligible Organizations that are considering filing a VCGroup submission may, of course, discuss the submission with the Service on an anonymous basis before filing the VCGroup submission.

.15 Special rules relating to VCSEP. A VCP submission for a SEP is required to be made under the VCSEP procedure. A VCSEP submission is subject to the procedures of sections 10 and 11. A SEP Plan is not eligible for VCO or VCS.

.16 Multiemployer and multiple employer plans. (1) In the case of a multiemployer or multiple employer plan, the plan administrator (rather than any contributing or adopting employer) must request consideration of the plan under the programs. The request must be with respect to the plan, rather than a portion of the plan affecting any particular employer.

(2) If a VCP submission for a multiemployer or multiple employer plan has failures that apply to fewer than all of the employers under the plan, the plan administrator may choose to have the compliance fee (in section 12) or sanction (in section 14) calculated separately for each employer based on the assets attributable to that employer, rather than being attributable to the assets of the entire plan. Thus, the plan administrator may choose to apply the provisions of this paragraph where the failure is attributable in whole or in part to data, information, actions, or inactions that are within the control of the employers rather than the multiemployer or multiple employer plan (such as attribution in whole or in part to the failure of a employer to provide the plan administrator with full and complete information).

SECTION 11. APPLICATION PROCEDURES FOR VCP

.01 General rules. The requirements of this section 11 are satisfied if the request for a compliance statement from the Service under VCP satisfies the informational and other requirements of this section 11. In general, a request under VCP consists of a letter from the Plan Sponsor (which may be a letter from the Plan Sponsor's representative) to the Service that contains a description of the failures, a description of the proposed methods of correction, and other procedural items, and includes supporting information and documentation as described below.

.02 Submission requirements. The letter from the Plan Sponsor or the Plan Sponsor's representative must contain the following:

(1) A complete description of the failures and the years in which the failures occurred, including closed years (that is, years for which the statutory period has expired).

(2) A description of the administrative procedures in effect at the time the failures occurred.

(3) An explanation of how and why the failures arose.

(4) A detailed description of the method for correcting the failures that the Plan Sponsor has implemented or proposes to implement. Each step of the correction method must be described in narrative form. The description must include the specific information needed to support the suggested correction method. This information includes, for example, the number of employees affected and the expected cost of correction (both of which may be approximated if the exact number cannot be determined at the time of the request), the years involved, and calculations or assumptions the Plan Sponsor used to determine the amounts needed for correction. See section 10.11 for special procedures regarding VCS.

(5) A description of the methodology that will be used to calculate earnings or actuarial adjustments on any corrective contributions or distributions (indicating the computation periods and the basis for determining earnings or actuarial adjustments, in accordance with section 6.02(4)).

(6) Specific calculations for each affected employee or a representative sample of affected employees. The sample calculations must be sufficient to demonstrate each aspect of the correction method proposed. For example, if a Plan Sponsor requests a compliance statement with respect to a failure to satisfy the contribution limits of section 415(c) and proposes a correction method that involves elective contributions (whether matched or unmatched) and matching contributions, the Plan Sponsor must submit calculations illustrating the correction method proposed with respect to each type of contribution. As another example, with respect to a failure to satisfy the ADP test in section 401(k)(3), the Plan Sponsor must submit the ADP test results both before the correction and after the correction.

(7) The method that will be used to locate and notify former employees and beneficiaries, or an affirmative statement that no former employees or beneficiaries were affected by the failures or will be affected by the correction.

(8) A description of the measures that have been or will be implemented to ensure that the same failures will not recur.

(9) A statement that, to the best of the Plan Sponsor's knowledge, neither the plan nor the Plan Sponsor is Under Examination.

(10) If a submission includes a failure that refers to Transferred Assets and occurred prior to the transfer, a description of the transaction (including the dates of the employer change and the plan transfer).

.03 Submission requirements under special procedures. The letter from the Plan Sponsor or the Plan Sponsor's representative must also contain the following:

(1) VCO. In the case of a VCO submission, a statement (if applicable) that the plan is currently being considered in a determination letter application. If the request for a determination letter is made while a request for consideration under VCO is pending, the Plan Sponsor must update the VCO request to add this information.

(2) VCS. In the case of a VCS submission, a statement that it is a VCS request, a description of the applicable correction in accordance with Appendix A or Appendix B, and a statement that the Plan Sponsor proposes to implement (or has implemented) the correction(s).

(3) VCT. In the case of a VCT submission, a statement that the Plan Sponsor has contacted all other entities involved with the plan and has been assured of cooperation in implementing the applicable correction, to the extent necessary. For example, if the plan's failure is the failure to satisfy the requirements of section 403(b)(1)(E) on elective deferrals, the Plan Sponsor must, prior to making the VCT application, contact the insurance company or custodian with control over the plan's assets to assure cooperation in effecting a distribution of the excess deferrals and the earnings thereon. An application under VCT must also contain a statement as to the type of employer (e.g., a tax-exempt organization described in section 501(c)(3)) submitting the VCT application.

(4) Anonymous Submission. In the case of an Anonymous Submission, a statement that the plan has not used the Anonymous Submission Procedure in the preceding two years with respect to the failures included in the submission.

(5) VCGroup. A VCGroup submission must be signed by the Eligible Organization or the Eligible Organization's authorized representative and accompanied by a copy of the relevant portions of the plan document(s).

(6) VCSEP. In the case of an VCSEP submission, a statement that it is a VCSEP request, a description of the applicable correction, and a statement that the Plan Sponsor proposes to implement (or has implemented) the correction(s).

.04 Required documents. A VCP submission must be accompanied by the following documents:

(1) Form 5500 or similar information. (a) VCP. In the case of the general procedures under VCP, a copy of the most recently filed Form 5500 series return.

(b) VCO and VCS. In the case of a VCO or VCS submission, a copy of the first page and a copy of the page containing employee census information (currently, line 7f of the 1999 Form 5500) and a copy of the page containing the total amount of plan assets (currently, line 31f of the 1999 Form 5500) or the most recently filed Form 5500 series return.

(c) Anonymous submission. In the case of a submission under the Anonymous Submission Procedure, the employee census and plan asset information may be redacted and replaced by numbers that are rounded up.

(d) VCT. In the case of a VCT submission, if Form 5500 is inapplicable, the information generally included on the first two pages of Form 5500, including the name and number of the plan, and the employer's Employer Identification Number.

(e) VCSEP. In the case of a VCSEP submission, if Form 5500 is inapplicable, the information generally included on the first two pages of Form 5500, including the name and number of the plan, and the employer's Employer Identification Number.

(2) Plan document. A copy of the relevant portions of the plan document. For example, in a case involving improper exclusion of eligible employees from a profit-sharing plan with a cash or deferred arrangement, relevant portions of the plan document include the eligibility, allocation, and cash or deferred arrangement provisions of the basic plan document (and the adoption agreement, if applicable), along with applicable definitions in the plan. If the plan is a 403(b) Plan and a plan document is not available, written descriptions of the plan, and sample salary reduction agreements if relevant. In the case of a SEP, submit the entire plan document.

(3) Determination letter application. In any case in which correction of a Qualified Plan failure includes correction of a Plan Document Failure or correction of an Operational Failure by plan amendment as permitted under section 4.06, other than adoption of an amendment designated by the Service as a model amendment or a standardized or prototype plan, the Plan Sponsor must submit the amendment, the appropriate application form (i.e., Form 5300 series or Form 6406), and the appropriate user fee.

(4) Copy of Favorable Letter for VCO, VCS, or VCSEP. In the case of VCO, VCS, or VCSEP, a copy of the determination letter, opinion letter, or notification letter that considered TRA '86, except:

(a) a governmental plan, or a non-electing church plan described in Rev. Proc. 99-23 for which the TRA '86 remedial amendment period has not yet expired should submit a copy of the determination, opinion, or notification letter that considered TEFRA, DEFRA, and REA and a statement that explains the reason why the period has not yet expired,

(b) plans initially adopted or effective after December 7, 1994 should submit a statement that the plan will be submitted timely for a determination, opinion, or notification letter within the plan's remedial amendment period under section 401(b), and

(c) in the case of a SEP, a copy of the most recent opinion letter for a prototype SEP, a copy of the current model SEP on Form 5305-SEP or 5305A-SEP, a copy of the private letter ruling issued to an individually designed SEP.

.05 Date VCP fee due generally. Except as provided in section 11.06, the VCP fee under section 12 is due at the time the compliance statement is signed by the Plan Sponsor and returned to the Service.

.06 Fee due earlier for VCO, VCS, Anonymous Submission, VCGroup, and VCSEP. In the case of a VCO or VCS submission, the appropriate fee described in section 12.02 or 12.03 must be included with the submission. In the case of a submission made under the Anonymous Submission Procedure, VCGroup, or VCSEP, the initial fee described in section 12.04(1), 12.06, or 12.07(1), respectively, must be included with the submission (and any additional fee is due at the time provided in section 11.05).

.07 Signed submission. The submission must be signed by the Plan Sponsor or the sponsor's authorized representative.

.08 Power of attorney requirements. To sign the submission or to appear before the Service in connection with the submission, the Plan Sponsor's representative must comply with the requirements of section 9.02(11) and (12) of Rev. Proc. 2001-4, 2001-1 I.R.B. 121.

.09 Penalty of perjury statement. The following declaration must accompany a request and any factual information or change in the submission at a later time: Under penalties of perjury, I declare that I have examined this submission, including accompanying documents, and, to the best of my knowledge and belief, the facts presented in support of this submission are true, correct, and complete. The declaration must be signed by the Plan Sponsor, not the Plan Sponsor's representative.

.10 Checklist. The Service will be able to respond more quickly to a VCP request if the request is carefully prepared and complete. The checklist in Appendix C is designed to assist Plan Sponsors and their representatives in preparing a submission that contains the information and documents required under this revenue procedure. The checklist in Appendix C must be completed, signed, and dated by the Plan Sponsor or the Plan Sponsor's representative, and should be placed on top of the submission. A photocopy of this checklist may be used.

.11 Designation. The letter to the Service should be designated VCP, VCO, VCS, VCT, VCSEP, or VCGroup, as appropriate, in the upper right hand corner of the letter. In addition if the submission is an Anonymous Submission, the letter should also be designated Anonymous Submission Procedure.

.12 VCP mailing address. Submissions under VCO (and any VCO submission under the Anonymous Submission Procedure), VCGroup, and VCSEP should be mailed to:

Internal Revenue Service Attention: T:EP:RA:VC P.O. Box 27063 McPherson Station Washington, D.C. 20038

All other VCP submissions should be mailed to:

If the entity is in:               the application should be sent to:
____________________                _________________________________

Connecticut, Maine,                 Employee Plans VCP
Massachusetts, Michigan,            Internal Revenue Service
New Hampshire, New Jersey,          10 Metro Tech Center
New York, Ohio, Pennsylvania,       625 Fulton Street
Rhode Island, Vermont               Brooklyn, NY  11201
                                    Phone (718) 488-2372
                                    FAX (718) 488-2405

Alabama, Delaware, District of      Employee Plans VCP
Columbia, Florida, Georgia,         Internal Revenue Service
Indiana, Kentucky, Louisiana,       Room 1550
Maryland, Mississippi, North        P.O. Box 13163
Carolina, South Carolina,           Baltimore, MD  21203
Tennessee, Virginia, West           Phone (410) 962-3499
Virginia, any U.S. possession       FAX (410) 962-0882
or foreign country

Arkansas, Illinois, Iowa,           Employee Plans VCP
Kansas, Minnesota, Missouri,        Internal Revenue Service
Nebraska, North Dakota,             230 S. Dearborn
Oklahoma, South Dakota, Texas,      MC 4913 Chi
Wisconsin                           Chicago, IL 60604
                                    Phone (312) 886-1277
                                    FAX (312) 886-2386

Alaska, Arizona, California,        Employee Plans VCP
Colorado, Hawaii, Idaho,            Internal Revenue Service
Montana, Nevada, New Mexico,        2 Cupania Circle
Oregon, Utah, Washington, Wyoming   Monterey Park, CA 91755-7431
                                    Phone (323) 869-3905
                                    FAX (323) 869-3949

.13 Maintenance of copies of submissions. Plan Sponsors and their representatives should maintain copies of all correspondence submitted to the Service with respect to their VCP requests.

SECTION 12. VCP FEES

.01 VCP general procedure compliance fee. (1) Compliance fee chart. Except as otherwise provided in this section 12, the compliance fee for an application under VCP is determined in accordance with the chart below. The chart contains a graduated range of fees based on the size of the plan and the number of participants. Each range includes a minimum amount, a maximum amount, and a presumptive amount. In each case, the minimum amount is the applicable VCO fee in section 12.02. It is expected that in most instances the compliance fee imposed will be at or near the presumptive amount in each range; however, the fee may be a higher or lower amount within the range, depending on the factors in paragraph (2) below.

_____________________________________________________________________
               VCP GENERAL PROCEDURES COMPLIANCE FEES
_____________________________________________________________________
# of participants       Fee range               Presumptive Amount
_____________________________________________________________________
10 or fewer            VCO fee /*/ to  $4,000         $2,000

11 to 50               VCO fee /*/ to  $8,000         $4,000

51 to 100              VCO fee /*/ to $12,000         $6,000

101 to 300             VCO fee /*/ to $16,000         $8,000

301 to 1,000           VCO fee /*/ to $30,000        $15,000

Over 1,000             VCO fee /*/ to $70,000        $35,000
_____________________________________________________________________

    /*/ Items marked by asterisk refer to the VCO compliance fee
that would apply under section 12.02 if the plan had been submitted
under VCO.

(2) Factors considered. Except as provided in section 12.01(3) with respect to nonamenders and section 12.01(4) relating to egregious failures, consideration of whether the compliance fee should be equal to, greater than, or less than the presumptive amount will depend on factors relating to the nature, extent, and severity of the failure. These factors include: (a) whether the failure is a failure to satisfy the requirements of section 401(a)(4), section 401(a)(26), or section 410(b), (b) whether the plan has both Operational and Plan Document Failures, (c) the period over which the violation occurred (for example, the time that has elapsed since the end of the applicable remedial amendment period under section 401(b) for a Plan Document Failure), (d) the extent to which the plan has accepted Transferred Assets, and the extent to which the failures relate to the Transferred Assets and occurred before the transfer, and (e) whether the plan has a Favorable Letter.

(3) VCP fee for nonamenders. The VCP compliance fee for a submission that includes only a Plan Document Failure that is solely a failure to amend the plan timely to comply with required tax law changes is determined in accordance with section 12.01(1), as follows.

(a) UCA or OBRA '93 model amendments only -- the fee is the halfway point between the minimum amount and the presumptive amount of the applicable fee range.

(b) TRA '86 -- the fee is the presumptive amount of the applicable fee range, and clause (a) does not apply.

(c) TEFRA, DEFRA, or REA -- the fee is the halfway point between the presumptive amount and the maximum amount of the applicable fee range, and clauses (a) and (b) do not apply.

(d) ERISA -- the fee is the maximum amount of the applicable fee range, and clauses (a), (b), and (c) do not apply.

(4) Egregious failures. In cases involving failures that are egregious (as described in section 4.09), (a) the maximum compliance fee applicable to the plan under the chart in 12.01(1) is increased to 40 percent of the Maximum Payment Amount and (b) no presumptive amount applies.

.02 VCO fee. (1) VCO fee generally. Unless VCS is applicable, the VCO compliance fee depends on the assets of the plan and the number of plan participants.

(a) The fee for a plan with assets of less than $500,000 and no more than 1,000 plan participants is $500.

(b) The fee for a plan with assets of at least $500,000 and no more than 1,000 plan participants is $1,250.

(c) The fee for a plan with more than 1,000 plan participants but fewer than 10,000 plan participants is $5,000.

(d) The fee for a plan with 10,000 or more plan participants is $10,000.

(2) Rev. Proc. 2001-8 modified. The VCO, Anonymous Submission Procedure, VCGroup, and VCSEP compliance fee is processed under the user fee program described in Rev. Proc. 2001-8, 2001-1 I.R.B. 239.

.03 VCS fee. The VCS compliance fee is $350.

.04 Fee for Anonymous Submission. The compliance fee for the Anonymous Submission Procedure is the fee applicable under other provisions of this section 12 (i.e., the fee under section 12.01 for VCP general procedures, the fee under section 12.02 for VCO, or the fee under section 12.05 for VCT).

(1) The initial portion of the fee is the amount determined under section 12.02 (for the VCP general procedures or VCO) or 12.05(2) (for VCT).

(2) The additional fee, if any, is the fee determined under section 12.01 or 12.05, if applicable, reduced by the fee in section 12.04(1).

.05 VCT Fee. (1) VCT compliance fee. The applicable VCT compliance fee depends on the type of failure and, generally, the number of employees of the employer.

(2) Fee for Operational Failures. Subject to section 12.05(3), the compliance fee for submissions that include only Operational Failures is as follows:

(a) The fee for an employer with fewer than 25 employees is $500.

(b) The fee for an employer with at least 25 and no more than 1,000 employees is $1,250.

(c) The fee for an employer with more than 1,000 employees but less than 10,000 is $5,000.

(d) The fee for an employer with 10,000 or more employees is $10,000.

(3) Fee for certain Excess Amounts. Subject to section 12.05(6), the compliance fee for Excess Amounts that are corrected pursuant to section 6.05(2)(b) is equal to the sum of (a) the applicable fee described in section 12.05(2), plus (b) two percent of the Excess Amounts, adjusted for earnings through the date of the VCT application, contributed or allocated in the calendar year of the VCT application and in the three calendar years prior thereto. If there is a failure to satisfy both the section 403(b)(2) and section 415 limits with respect to a single employee for a year, the fee will take into account only the larger Excess Amount.

(4) Fee for Demographic and Eligibility Failures. (a) Subject to section 12.05(6), the compliance fee for a 403(b) Plan with failures that include any Demographic or Employer Eligibility Failure is determined in accordance with the VCP fee table in section 12.01(1), except that (i) the reference to VCO fees is changed to refer to the VCT compliance fee for Operational Failures in section 12.05(2) above and (ii) the fee is determined with reference to the number of employees rather than participants.

(b) In addition to the types of factors listed in section 12.01(2), factors considered in determining the compliance fee for failures that include any Demographic or Employer Eligibility Failure under VCT include: (i) whether the failures include a Demographic Failures, (ii) whether the 403(b) Plan has a combination of two or more types of failures (Operational, Demographic, and Employer Eligibility); and (iii) the period of time over which the failure occurred.

(5) Fee for multiple failures. If correction is requested for multiple failures, the compliance fee is determined in accordance with the table below.

_____________________________________________________________________
Multiple Operational Failures       Fee described in section 12.05(2)

Multiple Demographic or             Fee described in section 12.05(4)
Eligibility Failures

Combination of Operational and      Fee described in section 12.05(4)
Demographic or Eligibility
Failures

Operational Failure(s) with         Fee described in section 12.05(3)
section 6.05(2)(b) correction of
Excess Amounts

Demographic or Eligibility          Fee described in section
Failures and Operational Failures   12.05(3), substituting section
including section 6.05(2)(b)        12.05(4) fee for section 12.05(2)
correction of Excess Amounts        fee
_____________________________________________________________________

(6) Fee for egregious failures. In cases involving failures that are egregious, the maximum VCT compliance fee applicable to the plan is increased to 40 percent of the Total Sanction Amount and no presumptive amount applies.

.06 VCGroup fees. The compliance fee for a VCGroup submission is based on the number of plans to which the compliance statement is applicable. The initial fee is $10,000. In the case of a submission with only corrections under Appendix A or B, an additional fee is due equal to the product of the number of plans in excess of 20 times $125, up to a maximum of $40,000; in any other case, the additional fee is equal to the product of the number of plans in excess of 20 times $250, up to a maximum of $90,000.

.07 VCSEP fees. The applicable VCSEP compliance fee is the same as the fee for VCP in section 12.01, subject to the following:

(1) In the case of a SEP with Operational Failures only, the compliance fee is determined in accordance with the VCO fee schedule in section 12.02, except that the fee is determined solely on the basis of the number of plan participants.

(2) In any case in which a SEP correction is not similar to a correction for a similar Qualification Failure (as provided under section 6.08(1)), the Service may impose an additional fee.

.08 Establishing amount of assets and number of plan participants. Compliance fees under this section 12 are calculated by the Plan Sponsor using the numbers from the most recently filed Form 5500 series to establish the fee. Thus, with respect to the 1999 Form 5500, the Plan Sponsor would use the number shown on line 7(f) (or the equivalent line on the Form 5500 C/R or EZ) to establish the number of plan participants and would use line 31(f) (or the equivalent line on the Form 5500 C/R or EZ) to establish the amount of plan assets. If the submission involves a plan with Transferred Assets and the Service determines that none of the failures in the submission occurred after the end of the second plan year that begins after the corporate merger, acquisition or other similar employer transaction, the Plan Sponsor may calculate the amount of plan assets and number of plan participants based on the Form 5500 information that would have been filed by the Plan Sponsor for the plan year that includes the employer transaction if the Transferred Assets were maintained as a separate plan. In the case of a SEP not required to file a Form 5500, the Plan Sponsor may use other reasonable information to determine the amount of plan assets and the number of participants.

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Other parts of this Revenue Procedure:
Table of Contents 1 2 3 4 5 6 7 a b c