The Internal Revenue Service (IRS) Voluntary Compliance Program (VCP) is one of the best methods for retirement plan sponsors to come clean and cost-effectively fix their plan errors, rather than getting hammered with substantial fines and penalties on an IRS audit. Like a good checkup, a VCP audit is a great way to find all the errors and correct them.
Recently, a client retained me to work on a VCP issue. We needed the IRS approval on a retroactive amendment. A week later, they also realized that there was a loan mistake. They asked whether a new VCP application was necessary and I advised them that it wasn’t. Legal and program fees for the VCP program can be costly, so plan sponsors must discover all the plan errors that can be taken care of under one VCP programsubmission.