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Form 14568E: Model VCP Compliance Statement- Schedule 5: Plan Loan Failures(Qualified Plans and 403(b) Plans)
IRS Form 14568-E is a Model VCP Compliance Statement – Schedule 5 used by qualified retirement plans and 403(b) plans to report participant loan failures under IRC §72(p)(2). The form notes the maximum repayment period is five years from the loan’s original date.
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IRS Form 14568E - Model VCP Compliance Statement- Schedule 5: Plan Loan Failures(Qualified Plans and 403(b) Plans)
IRS Form 14568-E is a Model VCP Compliance Statement – Schedule 5 used by qualified retirement plans and 403(b) plans to report participant loan failures under IRC §72(p)(2). The form notes the maximum repayment period is five years from the loan’s original date.
Risk Radar
Scan points- 1Failing to pay required income‑tax withholding for the loan failure triggers penalties.
- 2Leaving the plan name, EIN, or plan number off any page of the statement.
- 3Checking the wrong failure box (A, B, or C) for the loan violation.
- 4Omitting the number of participants affected for a reported failure.
- 5Answering “No” to correction before the five‑year limit when correction is actually possible.
Plain English
This form tells the IRS when a qualified plan or 403(b) plan’s participant loans do not meet the rules in IRC §72(p)(2). It describes why the loans failed, what correction the plan will make, and asks for relief from having the loans treated as taxable distributions.
Submission Date
- Filing date: 2018-06-28 23:00:07
- Preparation window: collect IDs, supporting records, and signatures in advance.
- Final review: verify names, dates, and required fields before submission.
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What this form is for
- Use this form when the defaulted loan meets IRC §72(p)(2) requirements, the affected participant is a key employee or owner‑employee, and the request is limited to permitting the plan sponsor to report the loan as a deemed distribution in the year of correction.
- Do not use it when the participant is not a key employee or owner‑employee, or when the request is not limited to permitting a deemed distribution (i.e., answer to question B is No).
- Check Form 14568 instead when a detailed written attachment describing the relief requested must be filed.
Form selector
Use this form or another form?
Participant is not a key employee or owner‑employee
Eligibility for Form 14568‑E requires key‑employee status
✓ Verify participant’s employment classification
Request purpose exceeds permitting a deemed distribution
Form 14568‑E is only for limited deemed‑distribution requests
✓ Confirm the purpose aligns with question B
Relief requires a detailed written attachment
Attach a narrative request to Form 14568 rather than using Form 14568‑E
✓ Prepare the attachment before filing
Deadline or filing window
Not stated in the official source.
Checklist
What you need before filling it out
Section II A – Key employee status
Employment classification documents · Plan participant file
Section II B – Purpose limitation
Written statement of request purpose · Form instructions
Section III – Prior loan payment application
Loan amortization schedule · Loan agreement records
Section IV B – Reamortization for over‑period loans
Original loan terms and repayment schedule · Loan documents
Section IV C – Defaulted loan compliant terms
Outstanding loan balance and interest · Loan ledger
Before you submit
- 1Confirm the form shows revision date 6‑2018.
- 2Verify the plan number and EIN are entered correctly.
- 3Answer “Yes” to Section II A only if an affected participant is a key employee or owner‑employee.
- 4Answer “Yes” to Section II B only if the request is limited to permitting a deemed distribution in the year of correction.
- 5Select the appropriate box in Section III that matches how prior payments were applied.
- 6Check the correct box in Section IV B or IV C that reflects the loan’s correction method.
- 7Attach a detailed written relief request if the situation requires it.
- 8Sign the form where required before mailing.
How to file this form
- 1Review eligibility and answer Section II questions A, B, and C.
- 2Complete Section III by indicating how prior loan payments were applied.
- 3Select the appropriate correction option in Section IV (B or C) and fill required details.
- 4Prepare and attach any required detailed written relief request.
- 5Sign the form in the designated signature area.
- 6Mail the completed Form 14568‑E to the IRS and retain a copy for records.
Known limitations
- 1Form 14568‑E applies only to qualified plans and 403(b) plans; it does not apply to other plan types.
- 2Form 14568‑E does not apply to loan defaults where the loan terms did not satisfy the requirements of IRC §72(p)(2).
- 3If the purpose of the request is not limited to permitting the plan sponsor to report the loan as a deemed distribution in the year of correction, the form must not be used.
- 4If any affected participant is a key employee or owner‑employee, the filer must answer additional eligibility questions; failure to do so makes the filing incomplete.
Field map
Compact field-by-field guide
General Info
2 items
Full legal name and taxpayer identification number (SSN or EIN).
Current mailing address.
Details
2 items
Complete all applicable sections of this form according to the official IRS instructions.
Enter the relevant dollar amount if this form involves tax calculation.
Certification
1 items
Read and acknowledge any certifications required by this form.
Signatures
1 items
Sign and date. Unsigned forms cannot be processed.
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Fillable formOpen in Editor->Form 14568‑E (Rev. 6‑2018) is the current edition; the source shows revision date June 2018 and does not indicate a newer version.
What changed or needs a fresh check
- Edition date — confirm the revision reads 6‑2018
- Form title — confirm it reads “Model VCP Compliance Statement‑ Schedule 5: Plan Loan Failures (Qualified Plans and 403(b) Plans)”
- Eligibility – confirm at least one affected participant is a key employee or owner‑employee
- Purpose – confirm the request is limited to permitting a deemed distribution in the year of correction
Quick Facts
Downloads
After you file
- 1Retain the completed Form 14568‑E and all enclosures for at least 7 years.
- 2Keep a copy of the submission confirmation or proof of mailing.
- 3Monitor for any IRS acknowledgment or request for additional information.
- 4If an error is discovered after filing, submit a corrected Form 14568‑E with updated information.
- 5Store the original loan agreements and amortization schedules with the filing.
- 6Document the corrective actions described in Section V for future reference.
Sources
- SRCForm p.1 — Form 14568‑E (Rev. 6‑2018) title and revision date.
- SRCForm p.1 — Indicates the form is for qualified plans and 403(b) plans.
- SRCForm p.2 — Section II A asks if any affected participant is a key employee or owner‑employee.
- SRCForm p.2 — Section II B states that if the purpose is not limited to permitting the plan sponsor to report the loan as a deemed distribution, the filer must STOP and not use the form.
- SRCForm p.2 — Section II C asks whether correction will be completed before the maximum repayment period expires.
- SRCForm p.2 — The form applies to defaulted loans where loan terms satisfied IRC §72(p)(2) requirements.
- SRCForm p.5 — Section VII lists required enclosures: original loan agreement, loan amortization schedules, and calculations.
- SRCForm p.5 — Mentions that the plan sponsor may propose reporting loans as deemed distributions using Form 1099‑R.
- SRCForm p.5 — Refers to the Procedural Requirements Checklist for Form 8950 as an additional required item.
- SRCForm p.5 — Section D describes that the plan sponsor shall pay any applicable income tax withholding for deemed distributions.
Common confusion points
Do I need to answer Section II B if my plan has no key employees?
Section II A directs you to skip B only if the answer to A is No.
→ Confirm that the answer to A is No; then you may bypass B.
Can I use this form if the loan default occurred because the loan terms were invalid?
The form is for defaults where loan terms satisfied IRC §72(p)(2) requirements.
→ Verify that the loan terms met IRC §72(p)(2) before filing.
Is this form applicable to non‑qualified plans?
The official title specifies qualified plans and 403(b) plans only.
→ Check the plan type; if it is not a qualified or 403(b) plan, do not use the form.
What if the correction will be completed after the five‑year repayment period?
Section C asks whether correction will be completed before the maximum period; the form can still be filed but the limited‑purpose eligibility may not be met.
→ Confirm the correction timing; if after the period, note that the limited‑purpose condition is not satisfied.
Do I need to attach the loan agreement and amortization schedules?
Section VII lists the required enclosures, including a copy of the original loan agreement and amortization schedules.
→ Include those documents with the submission.
If I answer No to question B, can I still use the form?
The instructions state “If ‘No,’ STOP‑do NOT use this Form 14568‑E.”
→ If the answer to B is No, do not file this form; use another appropriate request method.
Workflow map
Related forms and next steps
Before
Current
After
Often used with
⚠ If something goes wrong
- Form 14568 – Submit a detailed written attachment describing the relief requested when the request is denied.
Questions about IRS Form 14568E
What is IRS Form 14568E used for?
This form tells the IRS when a qualified plan or 403(b) plan’s participant loans do not meet the rules in IRC §72(p)(2). It describes why the loans failed, what correction the plan will make, and asks for relief from having the loans treated as taxable distributions.
Who must file IRS Form 14568E?
The plan sponsor of a qualified retirement plan or a 403(b) plan must file IRS Form 14568-E.
What information does IRS Form 14568E require?
The form collects the plan’s name, EIN and plan number, identifies the specific loan failure(s) in Section I, details participant counts and loan counts for each violation (A, B, C), answers whether correction will occur before the five‑year repayment limit, explains the cause in Section III, proposes a correction method in Section IV, outlines new administrative procedures in Section V, and records any relief requests in Section VI.
How do I complete IRS Form 14568E?
First, place the plan name, EIN and plan number on every page. Next, complete Section I by checking the applicable failure boxes (A, B, C) and entering the number of participants affected and loans violated. Answer the Yes/No question on whether correction will be finished before the five‑year repayment period, then fill out Section III explaining the cause. Provide the proposed correction in Section IV, describe new administrative safeguards in Section V, and indicate any relief requests in Section VI. Sign the form before submission.
What happens if IRS Form 14568E is filed incorrectly?
If the form is inaccurate, the plan sponsor must still pay any required income‑tax withholding tied to the loan failure, and may face additional penalties.
Do I need to answer Section II B if my plan has no key employees?
Section II A directs you to skip B only if the answer to A is No. Confirm that the answer to A is No; then you may bypass B.
Can I use this form if the loan default occurred because the loan terms were invalid?
The form is for defaults where loan terms satisfied IRC §72(p)(2) requirements. Verify that the loan terms met IRC §72(p)(2) before filing.
Is this form applicable to non‑qualified plans?
The official title specifies qualified plans and 403(b) plans only. Check the plan type; if it is not a qualified or 403(b) plan, do not use the form.
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