Revenue Procedure 2003-44, Part V

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Part V. Voluntary Correction with Service Approval (VCP)

Section 10. VCP Procedures .01 VCP requirements. .02 Identification of failures. .03 Availability of correction of a terminated plan. .04 Effect of VCP submission on examination. .05 No concurrent examination activity. .06 Determination letter application for plan amendments related to a VCP submission. .07 Determination letter applications not related to a VCP submission. .08 Processing of submission. .09 Compliance statement. .10 Effect of compliance statement on examination. .11 Special rules relating to Anonymous (John Doe) Submissions. .12 Special rules relating to Group Submissions. .13 Multiemployer and multiple employer plans. Section 11. Application Procedures for VCP .01 General rules. .02 Submission requirements. .03 Required documents. .04 Date VCP fee due generally. .05 Additional fee due earlier for 403(b) Plans, SEPs and SIMPLE IRA Plans. .06 Signed submission. .07 Power of attorney requirements. .08 Penalty of perjury statement. .09 Checklist. .10 Designation. .11 VCP mailing address. .12 Maintenance of copies of submissions. Section 12. VCP Fees .01 VCP fees. .02 VCP fees for Qualified Plans and 403(b) Plans. .03 VCP fee for nonamenders. .04 VCP fee for Group Submission. .05 VCP fee for SEPs and SIMPLE IRA Plans. .06 VCP fee for egregious failures. .07 Establishing the number of plan participants.

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Part V. Voluntary Correction Program with Service Approval (VCP)

Section 10. VCP 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 10.09.

.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 Availability of correction of a terminated plan. Correction of Qualification Failures in a terminated plan may be made under VCP, whether or not the plan trust is still in existence.

.04 Effect of VCP submission on examination. Because VCP does not arise out of an examination, consideration under VCP does not preclude or impede (under § 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. See section 5.03 for the definition of Under Examination.

.05 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.

.06 Determination letter application for plan amendments related to a VCP submission. In any case in which correction of a Qualification Failure includes correction of a Plan Document Failure or Demographic Failure, or an Operational Failure by plan amendment, as permitted under section 4.05, other than the adoption of an amendment designated by the Service as a model amendment or the adoption of a prototype or volume submitter plan for which the Plan Sponsor has reliance on the plan's opinion or advisory letter as provided in Rev. Proc. 2003-6, 2003-1 I.R.B. 191, the Plan Sponsor must 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. The user fee for the determination letter application and the fee for the VCP submission must be submitted on separate checks made payable to the U.S. Treasury. See section 11.11 for the VCP mailing address.

.07 Determination letter applications not related to a VCP submission.

(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. If the Service in connection with a determination letter application discovers a Qualification Failure, 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.) If the Plan Sponsor discovers a Qualification Failure, the Plan Sponsor should submit an application under VCP to correct the failure.

.08 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 the Plan Sponsor did not voluntarily bring it forward. 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, the matter will be closed, the compliance fee will not be returned, and the case may be referred to Employee Plans Examinations. In the case of an Anonymous Submission that fails to reach resolution under EPCRS, the Service will refund 50% of the applicable VCP fee. See section 12.02 for the VCP fee.

(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 section 11.05). 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 prior to the expiration of the correction period 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 $3,000.

(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 § 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.

.09 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 § 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.

.10 Effect of compliance statement on examination. The compliance statement is binding upon both the Service and the Plan Sponsor or Eligible Organization (as defined in section 10.12(2)) 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.

.11 Special rules relating to Anonymous (John Doe) Submissions.

(1) The Anonymous Submission procedure permits submission of Qualified Plans, 403(b) Plans, SEPs and SIMPLE IRA Plans under VCP without initially identifying the applicable plan(s), the Plan Sponsor(s), or the Eligible Organization. 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 (and the power of attorney statement and the penalty of perjury statement need not be included with the initial submission). In addition, if a determination letter application will be requested as part of the submission, the determination letter application should not be submitted until the time all identifying information is provided to the Service. For purposes of processing the submission, the State of the Plan Sponsor must be identified in the initial submission. 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 (including the power of attorney statement and the penalty of perjury statement) 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 10.05, until the plan(s) and Plan Sponsor(s) 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(s) and Plan Sponsor(s) identifying materials are received by the Service will no longer be eligible under VCP.

.12 Special rules relating to Group Submissions.

(1) General rules. An Eligible Organization may submit a VCP request for a Qualified Plan, a 403(b) Plan, a SEP, or a SIMPLE IRA Plan under a Group Submission for Operational and Plan Document Failures.

(2) Eligible Organizations. For purposes of a Group Submission, 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, (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, 403(b) Plans, SEPs or SIMPLE IRA Plans. An Eligible Organization is not eligible to make a Group Submission unless the submission includes a failure resulting from a systemic error involving the Eligible Organization that affects at least 20 plans and that results in at least 20 plans implementing correction. If, at any time before the Service issues the compliance statement, the number of plans falls below 20, the Eligible Organization must notify the Service that it is no longer eligible to make a Group Submission (and the compliance fee may be retained).

(3) Special Group Submission procedures.

(a) A Group 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) The Eligible Organization must provide notice to all Plan Sponsors of the plans included in the Group Submission. The notice must be provided at least 90 days before the Eligible Organization provides the Service with the information required in section 10.12(3)(c). The purpose of the notice is to provide each Plan Sponsor with information relating to the Group Submission request. The notice should explain the reason for the Group Submission and inform the Plan Sponsor that the Plan Sponsor's plan will be included in the Group Submission unless the Plan Sponsor responds within the 90-day period to exclude the Plan Sponsor's plan from the Group Submission.

(c) When an Eligible Organization 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 12.04, 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 (ii) the plans by name, plan number, type of plan, number of plan participants, and trust's tax identification numbers, if applicable, (iii) a certification that each Plan Sponsor received notice of the Group Submission and, (iv) a certification that each Plan Sponsor timely filed the Form 5500 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.

(d) Notwithstanding section 10.05, until the Eligible Organization provides the Service with the information of section 10.12(3)(c) with respect to a Plan Sponsor and its plan(s), a Group Submission does not preclude or impede an examination of a Plan Sponsor or its plan(s).

(4) Group Submissions implementation. The Group Submission procedure is being implemented on a provisional basis, and the Service and Treasury invite comments on the operation of the Group Submission procedure.

.13 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) or Eligible Organization (or 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 statement identifying the type of plan submitted (e.g., Qualified Plan, 403(b) Plan, SEP, or SIMPLE IRA Plan) and, if applicable, whether the submission is a Group Submission, an Anonymous Submission or a nonamender submission.

(2) 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).

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

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

(5) 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.

(6) 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)).

(7) 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 § 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 § 401(k)(3), the Plan Sponsor must submit the ADP test results both before the correction and after the correction.

(8) 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.

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

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

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

(12) A statement (if applicable) that the plan is currently being considered in a determination letter application that is not related to the VCP application. If the request for a determination letter is made while a request for consideration under VCP is pending, the Plan Sponsor must update the VCP request to add this information.

(13) In the case of a 403(b) Plan 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 § 403(b)(1)(E) on elective deferrals, the Plan Sponsor must, prior to making the VCP 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 VCP must also contain a statement as to the type of employer (e.g., a tax-exempt organization described in § 501(c)(3)) submitting the VCP application.

(14) A Group 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).

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

(1) Form 5500 or similar information.

(a) Qualified Plan. In the case of a Qualified Plan, a copy of the first three pages of the most recently filed Form 5500 series return. In the case of a terminated plan, the Form 5500 must be the one filed for the plan year prior to the plan year for which the Final Form 5500 return was filed.

(b) 403(b) Plan, SEP and SIMPLE IRA Plan. In the case of a 403(b) Plan, SEP or SIMPLE IRA Plan submission, if Form 5500 is inapplicable, the information generally included on the first three pages of Form 5500, including the name and number of the plan, and the employer's Employer Identification Number.

(c) Anonymous Submission. In the case of an Anonymous Submission, the employee census may be redacted and replaced by numbers that are rounded up.

(2) Plan document. A copy of the entire plan document or 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 description of the plan, and sample salary reduction agreements if relevant. In the case of a SEP and a SIMPLE IRA Plan, submit the entire plan document.

(3) Determination letter application. In any case in which correction of a Qualification Failure includes correction of a Plan Document Failure or Demographic Failure, or an Operational Failure by plan amendment, as permitted under section 4.05, other than the adoption of an amendment designated by the Service as a model amendment or the adoption of a prototype or volume submitter plan for which the Plan Sponsor has reliance on the plan's opinion or advisory letter as provided in Rev. Proc. 2003-6, 2003-1 I.R.B. 191, the Plan Sponsor must 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. The user fee for the determination letter application and the fee for the VCP submission must be submitted on separate checks made payable to the U.S. Treasury. See section 11.11 for the VCP mailing address.

.04 Date VCP fee due generally. Except as provided in section 11.05, the VCP fee under section 12 must be included with the submission. All fees must be submitted by check made payable to the U.S. Treasury.

.05 Additional fee due for 403(b) Plans, SEPs, SIMPLE IRA Plans, and Group Submissions. In the case of a 403(b) Plan, a SEP, a SIMPLE IRA Plan, or a Group Submission, the initial fee described in sections 12.02, 12.04 or 12.05 must be included in the submission (and any additional fee is due at the time the compliance statement is signed by the Plan Sponsor and returned to the Service).

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

.07 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. 2003-4, 2003-1 I.R.B. 123.

.08 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.

.09 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.

.10 Designation. The letter to the Service should indicate in the upper right hand corner of the letter the type of plan submitted under VCP, a Qualified Plan, 403(b) Plan, SEP, or SIMPLE IRA Plan. In addition if the submission is a Group Submission, an Anonymous Submission or a nonamender submission, the letter should so indicate.

.11 VCP mailing address. All VCP submissions and accompanying determination applications, if applicable, should be mailed to:

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

.12 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 fees. The compliance fees for all submissions under VCP are determined under this section 12. All fees must be submitted by check made payable to the U.S. Treasury and, except for the additional fees described in sections 12.02(2) and 12.05(2), must be included with the initial submission.

.02 VCP fee for Qualified Plans and 403(b) Plans.

(1) Subject to section 12.02(2), the compliance fee for a submission under VCP for Qualified Plans and 403(b) Plans (including Anonymous Submissions) is determined in accordance with the following chart. For 403(b) Plans, the fee is determined with reference to the number of employees rather than participants.

Number of Participants/ Employees	Fee
20 or fewer	$750.00
21 to 50	$1,000.00
51 to 100	$2,500.00
101 to 500	$5,000.00
501 to 1,000	$8,000.00
1,001 to 5,000	$15,000.00
5,001 to 10,000	$20,000.00
Over 10,000	$25,000.00

(2) In the case of a 403(b) Plan, if the VCP submission includes Excess Amounts that are corrected pursuant to section 6.06(2)(b), a fee equal to at least ten percent of the Excess Amounts, adjusted for earnings through the date of the VCP application, contributed or allocated in the calendar year of the VCP application and in the three calendar years prior thereto will be imposed. If there is a failure to satisfy both the § 403(b)(2) and § 415 limits with respect to a single employee for a year, the fee will take into account only the larger Excess Amount. This fee is in addition to the 403(b) Plan compliance fee in section 12.02(1).

.03 VCP fee for nonamenders. The compliance fee for plans that have not been amended for tax legislation changes within the plan's remedial amendment period (nonamenders (includes EGTRRA nonamenders)) is determined in accordance with the chart in section 12.02. The applicable fee is reduced by 50% for nonamenders that submit under VCP within a one-year period following the expiration of the plan's remedial amendment period for complying with tax law changes. For example, the fee for a "GUST nonamender plan" with 700 participants submitted within the one-year period following the expiration of the plan's remedial amendment period for GUST changes would be $4,000. See section 5.01(4)(a) for the definition of GUST.

.04 VCP fee for Group Submission. The compliance fee for a Group Submission is based on the number of plans affected by the failure as described in the compliance statement. The initial fee for the first 20 plans is $10,000. An additional fee is due equal to the product of the number of plans in excess of 20 multiplied by $250, up to a maximum of $50,000.

.05 VCP fee for SEPs and SIMPLE IRA Plans.

(1) The compliance fee for a SEP or a SIMPLE IRA Plan submission (including an Anonymous Submission) is $500.

(2) In any case in which a SEP or SIMPLE IRA Plan correction is not similar to a correction for a similar Qualification Failure (as provided under section 6.08(1) [SIC; should be 6.10(1)]), the Service may impose an additional fee. If the failure involves an Excess Amount to a SEP or a SIMPLE IRA Plan and the Plan Sponsor retains the Excess Amount in the SEP or SIMPLE IRA Plan, a fee equal to at least ten percent of the Excess Amount excluding earnings will be imposed. This is in addition to the SEP or SIMPLE IRA Plan compliance fee set forth in section 12.05(1).

.06 VCP fee for egregious failures. Notwithstanding the provisions of sections 12.02 and 12.05, in cases involving failures that are egregious (as described in section 4.08), the compliance fee for Qualified Plans, 403(b) Plans, SEPs and SIMPLE IRA Plans is the greater of the fee that would be determined under sections 12.02 and 12.05, or an amount equal to a negotiated percentage of the Maximum Payment Amount (Total Sanction Amount for a 403(b) Plan), such percentage not to exceed 40 percent.

.07 Establishing the number of plan participants. Compliance fees under this section 12 are determined based on the number of plan participants. For new plans and ongoing plans, the number of plan participants is determined from the most recently filed Form 5500 series. Thus, with respect to the 2002 Form 5500, the Plan Sponsor would use the number shown in item 7f (or the equivalent item on the Form 5500 C/R or EZ) to establish the number of plan participants. In the case of a terminated plan, the Form 5500 used to determine the number of plan participants must be the one filed for the plan year prior to the plan year for which the Final Form 5500 return was filed. If the submission involves a plan with Transferred Assets and no new incidents of the failure 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 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 or SIMPLE IRA Plan not required to file a Form 5500, the Plan Sponsor may use other reasonable information to determine the number of plan participants.

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Official location: 2003-25 I.R.B. 1051 (June 23, 2003)

Also online at https://benefitslink.com/IRS/revproc2003-44.pdf