In Rev. Proc. 2018-4, the IRS significantly reduced the fees for most submissions under its voluntary correction program (VCP), as of January 2. The VCP allows sponsors of qualified retirement plans to seek IRS approval for corrections of potentially disqualifying errors in plan documents or operations.

In the past, the VCP user fee was based on the number of plan participants. The IRS also allowed sponsors submitting applications for certain “streamlined” corrections, such as required minimum distributions and plan loan failures, to remit a reduced user fee, also based on the number of affected participants.

The IRS has eliminated the streamlined fees, and all regular VCP submission fees are now based on total plan assets:

Plan assets Fee
$500,000 or less $1,500
Over $500,000 up to $10 million $3,000
Over $10 million $3,500

For example, large plans with over 10,000 participants used to pay $15,000 for a VCP submission (other than a streamlined correction). Now the highest user fee is $3,500 for a plan with more than $10 million in assets. However, a plan sponsor submitting a streamlined correction will, in most cases, have to pay more than in the past.

Total plan assets are based on end-of-year net assets as reported on Form 5500. There is an alternative method for plans that do not file Form 5500 but are eligible to make VCP submissions.

In a separate informal announcement on its website, the IRS advises VCP applicants to follow certain procedures until IRS Form 8951 (User Fee for Application for VCP) is revised:

  • Continue using Form 8951 (September 2016 version).
  • Ignore the information on the form about VCP fees being based on the number of plan participants.
  • Don’t check boxes on Lines 8(a) through 8(c) because they no longer apply.
  • Attach a check for the fee amount according to Rev. Proc. 2018-4.