Updated forms on Pay.gov for the Voluntary Correction Program; pre-approved cash balance plans

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Changes to forms used on Pay.gov for IRS Voluntary Correction Program submissions  

The IRS updated Forms 8950 and 8951 on Pay.gov used for Voluntary Correction Program (VCP) submissions. 

Form 8950, Application for VCP Submission:

Updates to the “Before you begin” landing page include:

• Employers or authorized plan representatives may use the same Pay.gov username to submit multiple Forms 8950 for different plans or employers.
• Applicants may now submit larger faxes, up to 150MB. Include the Pay.gov tracking ID number, the applicant’s name and EIN, and plan name on the fax coversheet.
• Updated citations and edits for clarity.

Form 8950, page two - Penalty of Perjury Statement

Revised the penalty of perjury statement to clarify:

• Authorized representatives submitting a VCP submission on behalf of an employer are not signing under penalty of perjury.
• Instead, they are certifying their status as documented on an included Form 2848, Power of Attorney.
• The VCP submission must include a signed and dated penalty of perjury statement completed by the employer.

Form 8951, Additional Payment for Open VCP

Updates to the “Before you begin” landing page include:

• Employers or authorized plan representatives may use the same Pay.gov username to submit multiple Forms 8951 for different plans or clients.

Learn more about VCP at Correcting Plan Errors.

Pre-approved Second Cycle Cash Balance Plan - use of a lookback month and stability period when using a Treasury-based interest crediting rate

Pre-approved Cash Balance plans were first permitted for the second Cycle. Announcement 2018-05 gives adopting employers of pre-approved plans Cash Balance until April 30, 2020, to restate their plans to be timely for the second Cycle.

The Defined Benefit Listing of Required Modifications (LRM) Cash Balance Supplement provides language that meets the requirements of the pre-approved program. Section 26CB.I.B.4. of the LRM contains Treasury-based interest crediting rates for purposes of a cash balance plan’s hypothetical account. 

A plan is permitted to specify a look back month and stability period for purposes of determining the Treasury-based interest rate for the interest credit period; however, this is not currently addressed in the LRM.

If a sponsor, practitioner, or employer amends their pre-approved cash balance plan to specify a look back month and stability period, reliance on the second cycle (PPA) opinion or advisory letter will not be jeopardized.