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
Finding information on employee benefit plans can be difficult and time consuming. As a service to our clients, and other interested parties who are involved in or in need of employee benefit services, we'll gather all of the information for you. We'll keep you up-to-date on the latest laws and regulations and we will even add our own personal insight into what else is occurring in the employee benefits world. We will provide these posts weekly and hope to get your input and feedback on the various topics. We will also share that feedback with others, as we find appropriate.
Before posting a comment on a blog post please be aware that we do not give free advice to non-clients by email, comment response, or phone. Thank you!
- The Importance of Obtaining a Quality Audit
- Participant Loans – IRS Requirements
- Investment Policy – Why and What to Include?
- 2016 Retirement Plan Limits
- Compliance for Small Company Employee Benefit Plans
- 401K Pre-Approved Plans 2016 Deadline
- FASB’s Employee Benefit Plan Reporting Simplification
- Do I Need an Audit?
- Compliance Testing Failures – Now What?
- Key Qualities to Evaluate When Selecting an Auditor for Your Employee Benefit Plan