1. Introduction: What is Form 14568-D?

IRS Form 14568-D, officially titled Schedule 4 (Form 14568-D) – Model VCP Compliance Statement: SIMPLE IRAs, is a specialized compliance schedule published by the Internal Revenue Service (IRS). It is governed by Employee Plans (EP), an operating division of the IRS Tax Exempt and Government Entities (TE/GE) Division.

This form serves as an attachment to master Form 14568 (Model VCP Compliance Statement) under the IRS Voluntary Correction Program (VCP). It is designed specifically for small business owners and employers who sponsor Savings Incentive Match Plan for Employees (SIMPLE) IRA plans and need to correct operational errors or document failures to keep their plan in good standing with the federal government.

2. Purpose of the Form: Why Does Form 14568-D Exist?

SIMPLE IRA plans are designed to give small businesses with 100 or fewer employees an affordable, low-maintenance way to offer retirement benefits. Despite their streamlined design, SIMPLE IRAs must strictly follow federal rules under Internal Revenue Code Section 408(p), including mandatory employee eligibility requirements and strict employer contribution formulas.

When an employer mistakenly excludes an eligible worker, miscalculates employer matching funds, or fails to deliver annual plan notices, the entire SIMPLE IRA arrangement faces disqualification. Form 14568-D exists to solve this problem by providing a standardized, pre-approved correction process:

Preventing Plan Disqualification: If a SIMPLE IRA is disqualified, employer contributions are no longer tax-deductible, and employee contributions are treated as excess contributions subject to steep excise taxes. Form 14568-D avoids this outcome.
Standardizing Employee Make-Whole Remedies: It provides clear, IRS-approved calculations to restore missed salary deferrals and unpaid employer matching or nonelective contributions, including lost investment earnings.
Securing Formal IRS Protection: Upon approval, the IRS issues a signed compliance statement providing binding legal certainty that the IRS will not disqualify the plan for the disclosed mistakes.

3. Who Needs to File This Form?

Form 14568-D is completed by employers, business owners, and plan administrators who sponsor a SIMPLE IRA plan and uncover compliance failures. You should file this form if you meet the following criteria:

You sponsor a SIMPLE IRA plan established using IRS Form 5304-SIMPLE, Form 5305-SIMPLE, or an approved prototype plan agreement.
Your business accidentally excluded eligible employees from enrolling, making salary deferrals, or receiving required employer contributions.
You failed to make the mandatory employer matching contribution (dollar-for-dollar up to 3% of pay) or the 2% nonelective employer contribution for all eligible employees.
You failed to provide the mandatory annual 60-day election notice to employees before the November 2 deadline.
Contributions exceeded annual statutory limits, or you sponsored another qualified retirement plan during the same calendar year.
You are submitting an electronic Voluntary Correction Program filing through Pay.gov using IRS Form 8950 and master Form 14568.

4. Who Is Exempt / Not Required to File?

Form 14568-D applies strictly to SIMPLE IRA plans. You are exempt or not eligible to file this schedule under the following circumstances:

SEP and SARSEP Plans: Employers correcting Simplified Employee Pension plans must use Form 14568-C rather than Form 14568-D.
Qualified Plans and 403(b) Plans: Employers sponsoring 401(k) or profit-sharing plans must use Form 14568-B, while 403(b) sponsors must use Form 14568-A.
Compliant SIMPLE IRAs: Employers who have consistently enrolled all eligible staff, timely deposited contributions, and provided required notices have no reason to file this form.
Self-Correction Program (SCP) Eligible Errors: Minor operational errors that meet IRS criteria for internal self-correction can be rectified without filing an application or paying a user fee.
Plans Under IRS Examination: If the IRS has already notified you that your business or retirement plan is under audit, you are barred from VCP and must resolve errors through the Audit Closing Agreement Program (Audit CAP).

5. When to File: Deadlines and Frequency

Form 14568-D is an event-based form rather than an annual tax filing. You prepare and submit it only when you identify qualification or operational failures that require formal IRS approval.

To qualify for the Voluntary Correction Program, you must submit the form before the IRS contacts your business regarding an audit. Once an examination notice is issued, the favorable terms of VCP are no longer available. After the IRS approves your submission and delivers your executed compliance statement, you generally have 150 calendar days from the date of the compliance statement to deposit all corrective contributions and adjust internal payroll workflows.

6. Where and How to File

Initial submissions of Form 14568-D cannot be mailed as paper copies. They must be submitted digitally through the federal government’s online payment and form portal:

Pay.gov Submission: Complete Form 14568-D as an attachment to master Form 14568. Combine these forms, employee census spreadsheets, and plan agreements into a single PDF package and upload it via Pay.gov alongside Form 8950 (Application for Voluntary Correction Program).
Electronic User Fee Payment: The mandatory VCP user fee—which is determined by the total net assets in the SIMPLE IRA plan—must be paid electronically through Pay.gov at the time of submission.
Supplemental Records: If the assigned IRS Employee Plans specialist requests additional payroll records or calculations, submit them through secure electronic channels or deliver them to the designated IRS address as per instructions provided by the specialist.

7. Step-by-Step Instructions to Fill Form 14568-D

Form 14568-D provides standardized language to document SIMPLE IRA failures, describe corrective formulas, and explain future internal controls. The table below outlines its primary sections.

Section	Title	Information Required
Header	Plan & Sponsor Details	Plan name, Employer Identification Number (EIN), and 3-digit plan number (on every page).
Section I	Identification of Failures	Checkboxes identifying excluded employees, missed matching/nonelective contributions, notice failures, or document issues.
Section II	Correction Method	Detailed explanation of corrective contributions (missed deferrals, missed matches, lost earnings, and handling of excess funds).
Section III	Administrative Procedures	Narrative describing updated payroll systems, tracking tools, and onboarding controls to prevent recurrence.
Section IV	Enclosures	Checkboxes for attached contribution spreadsheets, earnings calculation worksheets, and plan agreements.

Header: Plan and Employer Information

Enter the complete legal name of the SIMPLE IRA plan, the employer’s nine-digit Employer Identification Number (EIN), and the three-digit plan number (typically 001). Federal rules require this exact header to appear at the top of every page of Form 14568-D and all attached exhibits.

Section I: Identification of Failures

Select the specific operational or document failures that occurred in your plan:

Exclusion of Eligible Employees: Check this box if you failed to give eligible workers the opportunity to make salary deferrals or failed to provide required employer contributions. Under federal rules, an employee is generally eligible if they earned at least $5,000 in any two preceding years and are reasonably expected to earn $5,000 in the current year.
Failure to Make Required Employer Contributions: Check this box if you failed to deposit the full 3% matching contribution or the 2% nonelective contribution by the statutory due date.
Failure to Provide 60-Day Notice: Check this box if the employer failed to give employees the annual 60-day election notice before the start of the calendar year.
Excess Contributions or Ineligible Employer: Check this box if contributions exceeded statutory limits or if the company maintained another retirement plan during the same year.

Section II: Description of Proposed Method of Correction

Confirm the standardized correction methods required by the IRS:

Missed Deferral Opportunity: When an employee was improperly excluded from deferring, the employer makes a corrective Qualified Nonelective Contribution (QNEC) equal to a percentage of the missed deferral opportunity, plus 100% of any missed matching contribution, adjusted for lost investment earnings.
Missed Employer Contributions: If the employer simply underpaid the match or nonelective contribution, the employer must deposit the full unpaid amount plus lost earnings into the employee’s SIMPLE IRA.
Excess Contributions: Explain whether excess amounts will be distributed back to the employer or participant, or retained in the account under special IRS sanction terms.

Section III: Revision of Administrative Procedures

Explain the internal changes you have put in place to ensure compliance going forward. For instance, explain how your payroll software has been configured to automatically track employee earnings across prior years, or describe automated calendar alerts established to send annual election notices every October.

Section IV: Enclosures and Attachments

Assemble and check off all supporting documentation, including the list of affected employees, compensation ledgers, corrective contribution calculations, and copies of current SIMPLE IRA plan agreements.

8. Required Documents and Information Needed Before Filling

Before preparing Form 14568-D, compile the following payroll and plan records:

A copy of your original signed Form 5304-SIMPLE, Form 5305-SIMPLE, or prototype plan agreement.
Payroll ledgers, W-2 forms, and employee census data showing hire dates, annual compensation, and salary deferrals for all workers during the affected years.
Copies of annual 60-day employee notices and salary reduction election forms.
Spreadsheets detailing the exact corrective contributions and lost earnings calculations for each affected worker.
Documentation confirming that active SIMPLE IRA accounts are established to receive corrective deposits.
Completed master Form 14568 and Form 8950.
A signed Form 2848 (Power of Attorney) if a CPA, enrolled agent, or ERISA attorney is representing you.

9. Common Mistakes to Avoid

Errors on Form 14568-D can delay IRS approval and increase administrative costs. Be sure to avoid these frequent errors:

Misapplying the $5,000 Rule: Under federal law, employees who earned $5,000 in any two previous years and expect to earn $5,000 this year are eligible. Employers often mistakenly apply 401(k) age or hour requirements instead.
Forgetting to Add Lost Earnings: Depositing only the original contribution amount is insufficient. You must calculate and include lost investment earnings from the date the deposit was originally due.
Altering Model Language: The wording in Form 14568-D is pre-approved by the IRS. Modifying or rewriting standard text can cause the IRS to reject the filing as a model submission.
Failing to Notify Former Employees: Employers are obligated to make corrective contributions for eligible former workers. You must make reasonable efforts to contact them and open a SIMPLE IRA on their behalf if needed.
Missing the 150-Day Correction Window: You must deposit all corrective funds and finalize administrative updates within 150 days of receiving the signed IRS compliance statement.

10. Penalties for Non-Filing or Errors

Ignoring SIMPLE IRA compliance errors can result in severe financial penalties if the IRS discovers the mistakes during an audit:

Loss of Plan Status: The entire arrangement fails under Internal Revenue Code Section 408(p), stripping the plan of its tax-advantaged status.
Disallowed Employer Deductions: The employer may lose business tax deductions claimed for SIMPLE IRA matching and nonelective contributions across all open tax years.
6% Annual Excise Taxes on Employees: If the SIMPLE IRA arrangement is disqualified, all contributions are treated as regular IRA contributions. Amounts exceeding the annual traditional IRA contribution limit become subject to a 6% excise tax under IRC Section 4973 for every year they remain in the account.
Substantial Audit CAP Sanctions: If the IRS discovers the error during an audit, the employer must negotiate a monetary sanction under Audit CAP, which is significantly more expensive than standard VCP user fees.

11. Related Forms or Schedules

Form 14568-D operates within an interconnected system of retirement plan forms:

Form 14568: Model VCP Compliance Statement (the primary master application).
Form 14568-C: Schedule 3 – SEPs and SARSEPs.
Form 8950: Application for Voluntary Correction Program (VCP) Submission.
Form 8951: Additional User Fee Payment for Open VCP Request.
Form 5304-SIMPLE: Savings Incentive Match Plan for Employees of Small Employers (Not for Use With a Designated Financial Institution).
Form 5305-SIMPLE: Savings Incentive Match Plan for Employees of Small Employers (For Use With a Designated Financial Institution).
Form 5330: Return of Excise Taxes Related to Employee Benefit Plans.
Form 2848: Power of Attorney and Declaration of Representative.

12. Frequently Asked Questions (FAQs)

1. What is the standard employee eligibility rule for a SIMPLE IRA?

Under federal law, an employee is eligible to participate if they received at least $5,000 in compensation from the employer during any two preceding calendar years and are reasonably expected to receive at least $5,000 during the current calendar year.

2. How does an employer correct a missed deferral opportunity on Form 14568-D?

The employer makes a corrective Qualified Nonelective Contribution (QNEC) to the employee’s SIMPLE IRA to replace the missed opportunity to save, along with 100% of any missed matching contribution and lost investment earnings.

3. Can an employer sponsor a SIMPLE IRA and a 401(k) in the same year?

Generally, no. Federal law prohibits an employer from maintaining a SIMPLE IRA plan if the employer or a member of a controlled group maintains another active qualified retirement plan covering the same employees in the same year.

4. What happens if an excluded employee no longer works for the company?

The employer must still make the corrective contribution for the former employee. The employer should contact the former worker to locate their SIMPLE IRA or establish an account on their behalf with the plan’s financial institution.

5. Does filing Form 14568-D protect employees from the 6% IRA excise tax?

Yes. When the IRS approves the correction under the Voluntary Correction Program, the contributions are formally recognized as qualified SIMPLE IRA contributions, eliminating the 6% excess IRA contribution excise tax under Section 4973.

6. How much is the IRS user fee for submitting Form 14568-D?

The user fee is based on the total net assets held in the SIMPLE IRA plan at the time of submission, typically ranging between $1,500 and $3,500, paid directly through Pay.gov.

13. Conclusion: Key Takeaways

IRS Form 14568-D is a vital compliance tool for small business owners sponsoring SIMPLE IRA plans. By utilizing this standardized schedule under the Voluntary Correction Program, employers can rectify missed contributions, resolve notice failures, and ensure their workers receive their full retirement benefits without risking plan disqualification.

Because computing missed deferral opportunities and lost earnings requires precise payroll and tax computations, employers should work alongside an experienced CPA, third-party administrator, or benefits attorney when preparing the Form 14568-D submission package.

IRS Form 14568-D Guide: SIMPLE IRA Plan Compliance Rules