If an employer realizes that they failed to sign a required amendment or restatement, the employer’s best course of action is to promptly file a VCP application with the IRS. The IRS does not provide for self-correction of plan document failures. For many plan document failures, the IRS allows plan sponsors to do a streamlined filing which generally reduces the professional fees associated with preparing the filing. Additionally, the IRS’s turnaround time on streamlined filings is pretty quick. The IRS VCP fee associated with a plan document failure depends on the type of failure and when the failure is corrected. The starting point is the general IRS VCP fee in Rev. Proc. 2008-50, which depends on the number of participants.
# of Participants Fee
20 or fewer $750
21 to 50 $1,000
51 to 100 $2,500
101 to 500 $5,000
501 to 1000 $8,000
1001 to 5000 $15,000
5001 to 10,000 $20,000
More than 10,000 $25,000
However, there are two common reductions to general VCP fee schedule. First, if a failure is solely due to failing to adopt an interim amendment or optional amendment, the fee is $375. Second, if the failure is corrected within one year, the penalty is reduced by 50%.