VCP most commonly stands for the Voluntary Correction Program, an IRS program that lets employers fix mistakes in their retirement plans without losing tax benefits. It also refers to the VMware Certified Professional certification in the IT world. Since the IRS program affects far more people (anyone who sponsors a 401(k), 403(b), or similar plan), we’ll cover that in depth first, then briefly explain the tech certification.
The IRS Voluntary Correction Program
The VCP is one of three programs within the IRS Employee Plans Compliance Resolution System (EPCRS). Its purpose is straightforward: if your company’s retirement plan has errors, whether in the plan documents or in how the plan has been operated, you can submit a correction proposal to the IRS, pay a fee, and get written approval to fix things. In return, the plan keeps its tax-favored status, your employees’ retirement savings stay tax-deferred, and you avoid the much larger penalties that come with an IRS audit discovering the same problems.
The key distinction is timing. You can only use VCP before the IRS audits your plan. Once an audit begins, the only formal resolution path is the Audit Closing Agreement Program (Audit CAP), which carries significantly higher sanctions. VCP gives you a chance to come forward voluntarily, on your own schedule, and resolve issues at a lower cost.
How VCP Differs From Self-Correction
The other EPCRS program worth understanding is the Self-Correction Program (SCP). With SCP, you fix certain plan failures on your own, without contacting the IRS or paying any fee. That sounds simpler, and it is, but SCP has limits. It only covers operational failures (mistakes in how you ran the plan, not errors in the plan document itself). It also works best for failures you catch and correct quickly.
VCP covers a wider range of problems. Plan document errors, such as failing to update your plan for required tax law changes, can only be corrected through VCP (or Audit CAP). If you’re unsure whether your proposed fix is acceptable, VCP gives you something SCP cannot: a written compliance statement from the IRS confirming your correction method is approved. That written confirmation can be worth the fee alone, especially for complex or high-dollar errors.
What Kinds of Errors Qualify
Retirement plan mistakes fall into a few broad categories, all of which VCP can address:
- Operational failures: The plan document says one thing, but the plan was run differently. Examples include making contributions to ineligible employees, missing required contributions, or applying the wrong vesting schedule.
- Plan document failures: The plan wasn’t updated to reflect required changes in tax law, or amendments were adopted late. This is sometimes called a “non-amender failure.”
- Loan failures: Participant loans that violated the plan’s terms or IRS rules, such as loans that exceeded the allowed repayment period or had missed payments that weren’t properly handled.
The IRS has published a list of the most common mistakes it sees in VCP submissions, which gives a practical sense of what triggers filings. Late plan amendments for tax law changes, unclear descriptions of how many participants were affected, and missing loan documentation all appear frequently.
How to File a VCP Submission
The process starts with preparing a submission package and sending it to the IRS through Pay.gov. Your submission needs to include:
- Form 8950: The application form for VCP.
- A description of each mistake: You identify the specific plan provisions that were violated and how many participants were affected.
- A proposed correction method: You explain exactly how you plan to fix each error, following the general correction principles in the IRS revenue procedure that governs EPCRS.
- Procedural changes: You describe what you’ll change in your plan administration to prevent the same mistakes from happening again.
- The user fee: Paid at the time of submission.
The IRS also provides model forms (Form 14568 and its schedules) that cover many common failure types. These can simplify the submission process considerably for straightforward errors.
Once you submit, the IRS reviews your proposal. While your submission is being processed, the IRS generally will not audit your plan. If the IRS approves your corrections, it issues a compliance statement detailing the mistakes and the approved fixes. You then have 150 days from the date of that statement to complete all corrective actions.
VCP Filing Fees
VCP fees are based on your plan’s net assets, determined from the most recently filed Form 5500 (the annual return most retirement plans must file). For submissions made on or after January 1, 2026, the fee schedule is:
- $0 to $500,000 in plan assets: $2,000
- Over $500,000 to $10,000,000: $3,500
- Over $10,000,000: $4,000
These fees are modest compared to the potential consequences of plan disqualification, which can include loss of tax deductions for the employer, immediate taxation of employee account balances, and excise tax penalties.
A few special cases apply. Orphan plans (plans whose sponsor has disappeared, leaving participants stranded) may have the fee waived on request. Group submissions, where multiple plans with similar failures are corrected together, start at $13,500 and cap at $50,000. Plans under Section 457(b), which are deferred compensation plans typically offered by government and nonprofit employers, are resolved outside of VCP entirely through a separate negotiated closing agreement.
Why VCP Matters for Plan Sponsors
Retirement plan errors are common. Rules around eligibility, contribution limits, required amendments, and loan administration are complex, and even well-run plans make mistakes. The real risk isn’t making an error. It’s leaving the error uncorrected.
A plan that loses its qualified status triggers a cascade of bad outcomes. The employer loses the tax deduction for contributions. Employees owe income tax on their account balances. The trust holding plan assets may lose its tax-exempt status. VCP exists specifically so that plan sponsors can avoid this outcome by fixing problems proactively, at a known cost, with IRS sign-off.
VCP in the IT World: VMware Certified Professional
In technology, VCP stands for VMware Certified Professional, a credential for IT professionals who work with VMware’s virtualization and cloud infrastructure products. VMware (now owned by Broadcom) offers VCP certifications across several tracks, including data center virtualization, cloud management and automation, network virtualization, security, end-user computing, and application modernization.
To earn your first VCP, you need to complete one required training course and pass a certification exam. Each track validates hands-on skills with specific VMware products. The Data Center Virtualization track, for example, covers vSphere environments, while the Network Virtualization track focuses on NSX. VCP sits at the professional level of VMware’s certification hierarchy, above the foundational level and below the advanced and expert tiers. It’s widely recognized in IT hiring, particularly for roles involving server virtualization, private cloud infrastructure, and enterprise networking.