If your plan sponsor clients (or TPA partners) need to make a voluntary correction for a plan error, they’ll soon have to do so online.
The Internal Revenue Service has released a new revenue procedure updating Employee Plans Compliance Resolution System (EPCRS) – and an announcement that beginning next year, all Voluntary Correction Program filings will have to be done online.
This revenue procedure updates the system of correction programs for sponsors of retirement plans that are intended to satisfy the requirements of Sections 401(a), 403(a), 403(b), 408(k), or 408(p) of the Internal Revenue – but that have “not met these requirements for a period of time.” The components of the EPCRS are the Self-Correction Program (SCP), the Voluntary Correction Program (VCP), and the Audit Closing Agreement Program (Audit CAP).
According to Revenue Procedure 2018-52 (which supersedes Revenue Procedure 2016-51), the IRS will begin accepting applications and payments under its Voluntary Correction Program (VCP) online through the www.pay.gov website beginning on Jan. 1, 2019. VCP submissions can continue to be made in paper form during a transition period ending April 1, 2019. However, the IRS says it will not accept paper VCP submissions postmarked on or after April 1, 2019.
‘PAY’ Day
The revenue procedure outlines the process for first establishing a pay.gov account, after which the applicant must complete Form 8950, Application for Voluntary Correction Program (VCP) Submission Under the Employee Plans Compliance Resolution System, using the www.pay.gov website. Documents relating to the VCP submission, including the description of failures, Form 14568 (Model VCP Compliance Statement), Schedules 1 through 9 of Form 14568, and any other applicable items (as set forth in section 11.04) for a VCP submission generally must be converted into a single PDF document and then uploaded onto the www.pay.gov website – though it cautions that there is a 15 MB size limitation for uploading a PDF document (and thus special instructions are provided for PDF files that exceed that limitation).
The revenue procedure also includes new procedures relating to the payment of user fees using the www.pay.gov website (there will no longer be an acknowledgment letter to the applicant), as well as how to designate an authorized representative to file a VCP submission with the IRS using the www.pay.gov website.
The 120-page revenue procedure covers a lot of ground, but one thing not yet redressed: it notes that user fees for all submissions under VCP are set forth in Appendix A of Rev. Proc. 2018-4 (and its annual successors) – which the American Retirement Association (ARA) has told the IRS is in “direct conflict with Congress’ directive to the Treasury Department to ‘[take] into account special concerns and circumstances that small employers face with respect to compliance and correction of compliance failures,’” and is a “complete departure” from the previous VCP user fee approach that was based on participant counts with lower fees for smaller plans.
