IRS Changes VCP User Fee Schedule
The total amount of net plan assets determines the applicable user fee now, not the number of participants.
Effective January 2, 2018, the Internal Revenue Service (IRS) simplified the user fees charged for most submissions made under the Voluntary Correction Program (VCP).
The total amount of net plan assets determines the applicable user fee now, not the number of participants. Most alternative or reduced fees that were part of previous revenue procedures no longer apply.
Effective for VCP submissions mailed to the IRS on or after January 2, 2018, if net plan assets are from $0 to $500,000, the fee is $1,500; if next plan assets are over $500,000 to $10,000,000, the fee is $3,000; and if net plan assets are over $10,000,000, the fee is $3,500.
The IRS explains that in many cases, retirement plan sponsors determine the amount of plan’s net assets from its most recently filed Form 5500-series return. If the plan is not required to file a Form 5500-series return, plan sponsors should see Rev. Proc. 2018-4, Appendix A.09 for additional information. For SEP/SARSEP/SIMPLE IRA plans, the amount of plan assets is the total value of all plan participants’ IRA account balances associated with the plan.
The new fee schedule doesn’t apply to Group VCP submissions, or submissions for orphan or 457(b) plans. More information is at https://www.irs.gov/retirement-plans/voluntary-correction-program-user-fees-changes.
The agency also issued information about how to obtain or re-establish an employer identification number (EIN) for a retirement plan trust. The IRS notes that retirement plan trustees shouldn’t use the plan sponsor’s EIN for the retirement plan trust.