Posted by Chris Ciminera, CPA, QKA
The Employee Benefit Security Administration (EBSA) is an agency of the Department of Labor (DOL) that protects the security of retirement, health and other workplace-related benefits of America’s workers and their families. The EBSA is charged with enforcing Title IV of ERISA. To help plan sponsors correct plan operational errors or certain fiduciary violations, the EBSA offers a Voluntary Fiduciary Correction Program (VFCP). The EBSA has different regions. In a recent webinar ; Mike Horton, the Associate Regional Director of the EBSA of the Philadelphia region, indicated that EBSA has an initiative to encourage plan sponsors who have reported delinquent participant contributions on the Form 5500 to correct them through the VFCP program.
What Does VFCP Correct?
There are 19 transactions eligible for relief under the VFCP, but 99% of the Philadelphia’s regions processed transactions are for late deferrals. As an auditor, I can attest that one of the most common errors found on audits is late deferrals.
What is the Advantage to Filing a VFCP Correction?
By filing through the VFCP, a plan sponsor will receive a no-action letter from the EBSA indicating to the plan that the EBSA will not take civil action against the plan sponsor with regard to the specific transaction in the submission. It is also important to note that there is no application fee to file through the VFCP.
What are the Requirements to be Eligible to Participate in the VFCP Program?
- Neither the plan nor applicant is under investigation by the DOL, Internal Revenue Service (IRS), Pension Benefit Guarantee Corporation (PBGC), state attorney, or insurance commissioner. Under investigation means that none of the aforementioned agencies have provided written or verbal notification of the investigation.
- There are no criminal violations, and
- The transaction must be 1 of the 19 eligible transactions allowed.
In my next blog, I will discuss how to file a VFCP application for a late deferral.