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ASPPA Recommends Self-Correction Component To Voluntary Fiduciary Correction Program

admin | September 30, 2011 | 0 Comments

Recommendation Serves Both Department & Plan Administrators

ARLINGTON, VA, (September 30, 2011) – The following is a statement from Craig P. Hoffman, General Counsel and Director of Regulatory Affairs of The American Society of Pension Professionals & Actuaries (ASPPA) from a letter filed with the U.S. Department of Labor (DOL) Employee Benefit Security Administration (EBSA) on the Voluntary Fiduciary Correction Program under the Employee Retirement Income Security Act of 1974 (ERISA).

“ASPPA urges the DOL to modify its Voluntary Fiduciary Correction Program (VFCP) as it applies to late deposits of elective deferrals under ERISA.

ERISA requires elective deferrals and loan repayments to be paid to a plan as soon as administratively feasible. However, DOL has recognized that well meaning plan sponsors may occasionally fail to meet this requirement and permits the correction of these types of mistakes through the VFCP.

ASPPA has been a strong supporter of the VFCP since its inception; however, we believe it would be greatly improved by the addition of a self-correction component that under certain circumstances would allow employers to self-correct the late deposit of elective deferrals. Plan sponsors, plan participants and DOL would all significantly benefit by permitting this approach.

We recommend adding a formal self-correction component for the late deposit of deferrals. This component would allow employers to correct in accordance with the current VFCP methodology without having to file an application with the Department. Instead, the employer would report that it self-corrected under VFCP and provide information on the correction as an attachment to Schedule H or I for the Form 5500, Annual Return/Report of Employee Benefit Plan.

We believe this proposal would assist DOL’s goals of ensuring timely deposits and in doing so protect plan participants and plan assets. We also believe the proposal would provide the necessary documentation and certainty that late deposits have been fully corrected. By simplifying and expanding participation through a self-correction component, DOL would be able to verify the important role VFCP plays with respect to the many plan sponsors, who self-correct in accordance with, and as a direct result of VFCP, but are not counted in the ‘official’ statistics.”

For more detail on these recommendations, please see ASPPA’s comment letter filed with the DOL.

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About ASPPA: The American Society of Pension Professionals & Actuaries (ASPPA) is a national organization of more than 7,500 retirement plan and benefits professionals that serves as the educator, voice, and advocate for the employer-based retirement system. ASPPA members are administrators, actuaries, advisors, attorneys, accountants, and other financial services professionals who provide consulting and administrative services for qualified retirement plans.