The American Society of Pension Professionals & Actuaries filed a letter with the U.S. Department of Labor asking that it modify the Voluntary Fiduciary Correction Program as it applies to late deposits of elective deferrals under the Employee Retirement Income Security Act.
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 voluntary program.
ASPPA has been a strong supporter of the correction program since its inception, but believes 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, said Craig Hoffman, ASPPA's general counsel and director of regulatory affairs, in a statement.
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The ASPPA recommends adding a formal self-correction component for the late deposit of deferrals, which would allow employers to correct the problem without having to file an application with the Department of Labor. Instead, the employer would report that it self-corrected under correction program 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," Hoffman said.
The American Society of Pension Professionals & Actuaries 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.
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