The good news is, you can fix this cleanly. The path runs through Form 14568‑G, and once you know the flow, you can turn a headache into a tight, defensible submission.
Key takeaways
- Use Form 14568‑G when your 403(b) or qualified plan failed to timely distribute elective deferrals over the 402(g) limit, and you are correcting through VCP. This is the IRS model schedule for this specific failure.
- File your VCP application electronically on Pay.gov using Form 8950, then pay the user fee there. If you later need to make an additional fee payment on an open case, use Form 8951 on Pay.gov.
- Correct the error under EPCRS Appendix A, section .04 by distributing the excess plus earnings, then handle tax reporting on Form 1099‑R. Late corrections may trigger double taxation and other consequences.
- For 2025, the 402(g) elective deferral limit is 23,500. Keep catch‑up rules and ordering in mind when you review facts and calculations.
- Assemble one clean PDF package with the model forms and narratives before you upload on Pay.gov, and mind file size limits.
Quick context for leaders: Most firms do not stall because of a lack of clients. They stall because delivery breaks down at scale. Clean, disciplined correction work like this is where your team’s process discipline shows up.
What Form 14568‑G actually is
Form 14568‑G is a model VCP schedule, also called Schedule 7, that you attach to your VCP submission when a plan failed to timely distribute elective deferrals that exceeded the IRC §402(g) limit. You use it to define the failure, list affected participants and years, show your correction method and earnings, and confirm how you will handle reporting. In short, it is the IRS’s template for this failure type, and it keeps your submission organized and aligned with EPCRS.
You will use the main Form 14568 for the compliance statement, then add the Schedule 7 attachment for the excess‑deferral issue. The IRS continues to publish and reference the 14568 series and its schedules, including Schedule 7 for 402(g) excess deferrals.
When you should use Schedule 7
Use Schedule 7 when all three are true:
- You have elective deferrals that exceeded the 402(g) annual limit.
- The excess amounts were not distributed by the April 15 deadline following the year of deferral.
- You are seeking a Voluntary Correction Program compliance statement under EPCRS.
This is the IRS’s expected route for late excess deferral corrections. Your schedule explains the failure, your method under Appendix A, section .04, how you calculated earnings, who is affected, and how you will report the corrective distributions.
Quick trigger to action table
| Trigger in your review | What you prepare |
| Excess deferrals over 402(g) | Form 14568‑G, Schedule 7 narrative and exhibits |
| Missed April 15 corrective deadline | VCP submission on Pay.gov with Form 8950 |
| Representative involved | Add Form 2848 for representation, or 8821 for information sharing |
Note, the initial VCP filing and fee are handled on Pay.gov through Form 8950. Form 8951 is used later only if you must make an additional user fee payment on an open VCP case.
How the VCP package fits together
Your package typically includes:
- Form 8950 on Pay.gov, which generates your control or tracking number and collects the user fee.
- Form 14568, the model compliance statement, plus the 14568‑G schedule for this failure.
- Narrative attachments that walk through the failure description, the correction method, affected participants, timing, and the steps you will take to prevent recurrence.
- If you have representation, add Form 2848. If you only want the IRS to copy another party, add Form 8821.
The IRS instructs you to file these items electronically, not on paper, and to combine your submission documents into a single PDF for upload. If your file exceeds the stated size, follow the IRS directions to split and fax the remainder.
Tip from the trenches: assign one owner to reconcile names, EINs, plan numbers, and dates across every form and attachment. Mismatches slow cases and create avoidable back‑and‑forth with the IRS.
How to correct excess 402(g) deferrals under EPCRS
Here is the flow most firms use when preparing the Schedule 7 correction:
- Identify each participant’s excess deferral for each year.
- Compute allocable earnings from the date of the excess deferral to the date of distribution, using a reasonable method tied to actual or reasonable earnings.
- Issue a taxable corrective distribution of the excess plus earnings.
- Handle tax reporting correctly to reflect the year of deferral and the year of distribution.
If you distribute after April 15 of the year following the excess, the tax rules are tougher. Under IRS guidance, late distributions generally cause the excess to be taxed in the year contributed and taxed again in the year distributed, with earnings taxed in the year distributed. You may also face 10% early distribution tax, 20% withholding, and spousal consent rules, depending on the facts. This is why timely review and action matter.
Reporting, the part that trips people up
- Report corrective distributions on Form 1099‑R, using the correct codes and years.
- For amounts distributed after April 15, report on a single 1099‑R for the year distributed, with the proper code.
- When distributions occur by April 15, the IRS requires special code combinations across years. Follow the 1099‑R instructions and the fix‑it guide examples.
- For designated Roth deferrals, your reporting differs since the original deferral was already included in income.
The 402(g) number you should have in your head
The elective deferral limit under §402(g) is 23,500 for 2025. This is the individual limit across a participant’s applicable plans for the year. Keep catch‑up rules in view, including age 50 catch‑up and the special 15‑year 403(b) catch‑up where available, and remember ordering rules when both apply.
Remember, excess deferrals not corrected by April 15 can threaten plan qualification, which is why VCP with Schedule 7 exists. The fix is a distribution of the excess plus earnings with proper reporting.
Building a clean, complete VCP submission
Use the IRS’s electronic process to keep your submission tight:
- Set up a Pay.gov account, complete Form 8950 online, and pay the user fee. Save the Pay.gov receipt and tracking ID because the IRS uses it as your control number.
- If there is an issue with the original fee or the IRS asks for an additional amount, send that add‑on payment with Form 8951 on Pay.gov. Do not submit a second 8950.
- Combine Form 14568, Schedule 7, narratives, calculations, and required exhibits into a single PDF before upload, mind the IRS file size guidance, and be ready to fax overflow if needed.
What to include in your narratives
- The failure, with dates, participants, and plan years.
- Why it happened, including any system, provider, or document issue.
- The correction method under Appendix A, section .04, including how you computed earnings.
- A prevention plan, such as limit monitors, provider data checks, and year‑end tie‑outs.
A quick earnings example you can tailor
- You identify a 2023 excess of 1,000 for Taylor.
- Actual investment return for the account period to distribution is 4 percent.
- You distribute 1,000 plus 40 in earnings in 2025.
- You issue the 1099‑R for 2025 per the instructions and the fix‑it guide’s coding. Taylor reports tax in the year of deferral for the excess and in the year of distribution as required, with earnings taxed in the year of distribution.
Quality control that prevents rework
If you have been around VCP submissions, you know the pitfalls. I recommend these checks before you upload:
- Cross‑foot your participant list to the trial balance and the plan provider export.
- Tie every number in your schedule to a calculation tab and label the tab with the participant name and EIN.
- Use consistent naming for files and workpapers, and lock versions once reviewed.
- Add a reviewer checklist for 1099‑R coding and timing because this is where many submissions stumble.
For firms that struggle with throughput during peak season, a disciplined delivery model makes a real difference. That includes SOPs for workpaper structure, layered reviews, and live status tracking. If you do partner with outside help, insist on standardization and clear SLAs so you do not trade one problem for another.
Personal note, I have seen more VCP cases stall on inconsistent narratives and missing attachments than on the math. Get the structure right and the case moves.
Access, versions, and small gotchas
- Always pull the current Form 14568 and schedule set from the IRS retirement plan forms hub, and confirm that Schedule 7 is included for the 402(g) failure. The IRS still references the 14568 series and schedules in its EPCRS resources and internal manual.
- EPCRS is currently set out in Rev. Proc. 2021‑30, with ongoing IRS web guidance that summarizes changes and provides links to model forms, kits, and fix‑it guides. When in doubt, follow the revenue procedure and the current web instructions.
A simple prep checklist
- Pull the latest 402(g) limit for each year and confirm catch‑up eligibility.
- Reconcile deferrals across all plans for dual participants.
- Identify all affected participants and years, then compute excess plus earnings.
- Draft narratives that map to EPCRS Appendix A, section .04.
- Prepare 1099‑R reporting details and W‑2 implications if applicable to the year of deferral.
- Assemble the package, QA the data, then file on Pay.gov with Form 8950.
FAQs
Do I still file anything on paper for VCP?
No. The IRS requires electronic filing on Pay.gov for Form 8950 and the upload of your PDF package. Paper submissions are not accepted.
When do I use Form 8951?
Only to make an additional user fee payment on an existing open VCP case. Your initial filing and fee run through Form 8950 on Pay.gov.
What happens if I miss the April 15 deadline?
You will correct through EPCRS, distribute the excess plus earnings, and handle reporting. Late distributions are generally taxed in the year of deferral and in the year distributed, with earnings taxed in the year distributed, and other consequences can apply.
How do I report corrective distributions?
Use Form 1099‑R with the codes and timing described in the 1099‑R instructions and the IRS fix‑it guides. For timely corrections, coding can span two forms. For late corrections, you report in the year distributed. For designated Roth amounts, follow the Roth‑specific reporting rules.
What is the 402(g) limit for 2025?
The limit is 23,500 for 2025. Check current IRS releases each year, since this is indexed.
Can I self‑correct instead of using VCP?
Sometimes. EPCRS allows SCP for certain failures when you meet the criteria and correct within the allowed time. If your failure is not eligible for SCP, or you want IRS written approval, file under VCP.
Where Accountably fits, only if you need help
If your internal team is buried, you can still keep control of standards. The right partner should work inside your systems, build structured workpapers, and follow clear SOPs so your reviewers spend time on judgment, not cleanup. That is the delivery approach Accountably uses with U.S. firms, from naming conventions to multi‑layer reviews and turnaround SLAs. Use it only if it helps your team hit deadlines without trading away quality or security.
Final word
You want two outcomes, clean compliance and a calm team. Form 14568‑G gives you the structure to fix excess 402(g) deferrals through VCP. Use the IRS model schedule, compute the excess plus earnings carefully, code the 1099‑R correctly, and file your package on Pay.gov with Form 8950. If you keep your facts tight and your documents consistent, you will get to a reliable close and protect plan status with confidence.
Sources and notes
- IRS retirement plan forms hub for the 14568 series and schedules.
- EPCRS overview and Rev. Proc. 2021‑30 updates.
- 402(g) limit announcement for 2025.
- Fix‑it guides and 1099‑R instructions for reporting.