Changes to the Voluntary Correction Program

by | May 10, 2016 | Institutional Services

The Voluntary Correction Program (VCP) is available to qualified retirement plan sponsors to obtain IRS approval for proposed plan corrections that — if not addressed in a timely fashion — could result in the loss of the plan’s tax-favored status or substantial sanctions for noncompliance. By submitting a written proposal to the IRS along with a compliance fee, plan sponsors can bring their plans back into compliance with federal tax law while continuing to provide employees with all the benefits of the plan.

The new fee schedule is in effect for submissions made from February 1, 2016, through January 31, 2017. It is generally applicable for all VCP submissions by 401(k) and 403(b) plan sponsors. To encourage plan sponsors to correct plan “failures” through the VCP, the new fees are reduced for almost all corrections. (Only the fees for plans with 101 to 500 participants remain unchanged.)

New General VCP Fees

New General VCP Fees







In addition, plan sponsors should continue to refer to IRS guidance contained in Revenue Procedure 2013-12, as modified by Rev. Procs. 2015-27 and 28, for additional information on VCP fees and eligibility for reduced fees for certain submissions.*

PPA Restatement Deadline Looms

The VCP applies to many types of qualified retirement plan failures, including the failure to restate a plan. The IRS requires that all preapproved plans, including master and prototype plans, as well as volume submitter plans, be restated once every six years.

The second six-year restatement cycle for preapproved defined contribution (DC) plans — known as the “PPA restatement” because many of the changes are required by the Pension Protection Act of 2006 — ended on April 30, 2016. Any preapproved DC plans that missed the restatement deadline are no longer in compliance. For them, a PPA document must be adopted and the plan sponsor must make a VCP submission to the IRS with the appropriate fee. Note that if you submit under VCP by April 30, 2017, the fee will be discounted by 50%.

* Internal Revenue Service, “Changes to Voluntary Correction Program Compliance Fees, Including Reduced Fees for Most 401(a) and 403(b) Plans,” January 6, 2016


Latest From The Blog


Our Services

Investment Management

Tailor portfolios to your needs and goals.

Retirement Planning

Investing and saving wisely is vital to success in retirement.

Financial Planning

Navigating the complexities of your financial affairs can be simplified.

Tax Management

Help to increase the amount you “take home”.

Estate Planning

Protect your loved ones and make sure your legacy endures.

Executive Compensation Analysis

Simplify the many options and decision points of executive compensation plans.

Education Planning

Confidently plan for your children’s future.

Charitable Giving

Give in a tax-smart, simple way.

*Please Note: Limitations.  The scope of services to be provided depends upon the terms of the engagement, and the specific requests and needs of the client. BFSG does not serve as an attorney, accountant, or insurance agent.  BFSG does not prepare legal documents or tax returns, nor does it sell insurance products.  Please Also Note: Different types of investments involve varying degrees of risk.  Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended and/or undertaken by BFSG) or any financial planning or consulting services, will be profitable, equal any historical performance level(s), or prove successful.

Sign Up For Our Newsletters

(They're great, we promise)

Connect With Us

Financial Services Group BBB Business Review