On Thursday, the IRS announced that it was issuing updated procedures and forms for sponsors of retirement plans that intended to qualify under Secs. 401(a), 403(a), 403(b), 408(k), or 408(p), but that have not met these requirements for a period of time. The procedures govern the Employee Plans Compliance Resolution System (EPCRS), which permits plan sponsors to correct these failures under the Self-Correction Program, the Voluntary Correction Program (VCP), and the Audit Closing Agreement Program.
The new revenue procedure contains model submission documents that can be used to ensure that all required information for the application for the VCP is included as well as all the rules that apply to the EPCRS (Rev. Proc. 2013-12). The IRS also provided fillable versions of the model documents on its website.
The VCP is available if the plan sponsor discovers the problem before it is discovered in an IRS examination, and the plan sponsor brings those failures to the attention of the IRS by filing Form 8950, Application for Voluntary Correction Program Under the Employee Plans Compliance Resolution System. In those cases, the plan sponsor pays a fee to preserve the tax benefit associated with properly maintained retirement plans. That fee is paid using Form 8951, Compliance Fee for Application for Voluntary Correction Program (VCP), which the IRS has just recently issued in a revised form.
Rev. Proc. 2013-12, which modifies and supersedes Rev. Proc. 2008-50, is effective April 1, 2013, but plan administrators may apply it on or after Dec. 31, 2012.
—Sally P. Schreiber (email@example.com) is a JofA senior editor.