On January 4, 2016, the IRS issued Revenue Procedure 2016-8, which provides guidance for complying with the user fee program of the Voluntary Correction Program (VCP). Effective February 1, 2016, the fees for a VCP filing for most new submissions will be reduced, a change made to encourage employers who sponsor 401(a) and 403(b) plans to correct plan failures through VCP. The following table summarizes the general VCP fee changes:

Click here to view table.

In addition, during 2015, the IRS began classifying VCP fees as “user fees” subject to IRC 7528. As a result, in 2016, plan sponsors will refer to a new annual revenue procedure to determine the appropriate fee when making a VCP submission to the IRS.

Thus, beginning February 1, 2016, plan sponsors should:

Note that the IRS will not apply the reduced fees for VCP submissions made prior to February 1, 2016, nor will they issue refunds for pre-February 1, 2016 VCP submissions that are withdrawn and then resubmitted under the reduced fee schedule.

To see the complete text of Revenue Procedure 2016-8, click here.