Two new federal Department of Labor programs will make it easier for employers and benefit plan officials to voluntarily correct certain employee benefit plan violations and avoid enforcement actions and hefty penalties. Here’s how these programs work.
Voluntary Fiduciary Correction Program
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The Voluntary Fiduciary Correction Program covers 14 specific financial transactions involving employee benefit plans. These include delinquent participant contributions to pension or welfare plans, certain prohibited fair-market and below-market-rate interest loans, certain prohibited purchases or sales of assets, improper valuation of plan assets, and improper payment of compensation to plan fiduciaries.
To participate in the VFCP, you must take these steps:
- Identify violations and determine whether the program covers them.
- Follow the specified process for correcting each violation.
- Calculate and restore any losses and profits with interest and distribute any supplemental benefits owed participants.
- File an application to participate in this program with the Pension and Welfare Benefits Administration, along with documentation showing you corrected the faulty financial transactions.
VFCP participants may also be eligible for an exemption from IRS excise taxes imposed on certain transactions the program covers. A fact sheet explaining more about the program, including covered transactions, acceptable corrections, required documentation, plan restitution and excise tax exemptions, is available on the DOL website. You can speak to a VFCP coordinator by calling the PWBA’s employer hotline at (866) 275-7922.
Delinquent Filer Voluntary Compliance Program
The second program is designed to encourage compliance with Employee Retirement Income Security Act annual reporting requirements. The Delinquent Filer Voluntary Compliance Program gives plan administrators who haven’t complied with certain Form 5500 filing obligations a chance to submit the required form and pay significantly reduced penalties for the late filing. The program also in-cludes updated and simplified filing procedures. Note that the IRS has suspended the requirement that employers who offer certain fringe benefits file a Form 5500 Schedule F. So if you haven’t filed this form, there’s no need to seek relief under the DFVCP.For more information about the DFVCP, go to the DOL website, or call the DFVCP hotline at (202) 219-8776.
New Electronic Filing Available
Finally, the Labor Department has just expanded options for using electronic means to communicate employee benefit plan information and to maintain benefit plan records. But note that for some communications, such as nonworkplace com-munications, employees must consent in writing to receive them electronically. For the text of the new regulations, go to the DOL Website.