Basics About the Voluntary Fiduciary Correction ProgramPosted on July 7 2009 by admin
The Voluntary Fiduciary Correction Program (VFCP) is a voluntary enforcement program that encourages the correction of possible violations of Title I of the Employee Retirement Income Security Act (ERISA). Anyone who may be liable for fiduciary violations under ERISA, including employee benefit plan sponsors, officials, and parties in interest, may voluntarily apply for relief from enforcement actions.
Violations can be fully and correctly resolved by following these four steps:
1) Identify any violations and determine whether they fall within the transactions covered by the VFCP;
2) Follow the process for correcting specific violations;
3) Calculate and restore any losses or profits with interest, if applicable, and distribute any supplemental benefits to participants; and
4) File an application with the appropriate EBSA regional office.
The VFCP provides descriptions of 19 categories of transactions and their methods of correction. Common categories of transaction include: the failure to transmit participant contributions to a pension plan within the time frames described in the DOL’s regulations, the failure to transmit participant loan repayments to a pension plan within a reasonable time after withholding or receipt by the employer and the use of plan assets to pay expenses, including commissions or fees, to a service provider (e.g., attorney, accountant, record-keeper, or actuary) for services provided in connection with the establishment, design or termination of the Plan.
The required application documentation generally includes:
- Copy of relevant portions of plan and related documents;
- Documents supporting transactions, such as leases and loan documents, and applicable corrections;
- Documentation of lost earnings amounts;
- Documentation of restored profits, if applicable;
- Proof of payment of required amounts (such as copy of cancelled check);
- Specific documents required for relevant transactions;
- Signed checklist; and
- Penalty of perjury statement.
Shannon Titch, CPA
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