The Internal Revenue Service’s Voluntary Correction Program (VCP) allows sponsors of retirement plans to “disclose mistakes in plan documents or operations, pay a fee, and work with the IRS to fix the errors and preserve the plan’s tax-favored status,” said The Kiplinger Tax Letter. “The [IRS] has now announced new procedures for filing VCP submissions. It won’t accept paper filings after March 31. Applicants must instead use pay.gov to electronically file their VCP submissions and pay the applicable user fees.”
However, the possible need to make corrections may simply not be on the radar of churches, said Ted Batson, attorney and CPA with CapinCrouse , adding that many church financial leaders are unaware of what it takes to be compliant. He said that this is complicated by the fact that compliance requirements vary among retirement plans and the rules can be difficult to understand. Even so, certain plans popular with churches (such as (403(b) and SIMPLE IRA) do require careful adherence to plan requirements. Churches should seek guidance from qualified retirement plan professionals, including their third-party plan administrator, Batson said.