Plan sponsors know that errors and failures in administering a retirement plan happen. All too often, changes in administrators, service providers and other staff uncover errors and compliance problems that should be corrected to protect a retirement plan’s tax-favored status or address a fiduciary breach.
The Internal Revenue Service (IRS) and the Employee Benefits Security Administration (EBSA) of the US Department of Labor also know that these errors and failures happen. To help plan sponsors fix such errors, streamline the corrections and reduce the respective agency’s audit burden, the IRS and EBSA have established correction programs to encourage plan sponsors to correct errors and establish administrative practices and procedures that ensure that these plans are operated properly. Generally, fees and sanctions are structured to be incentives for plan sponsors to correct errors promptly, rather than wait for a governmental auditor to discover the errors and require corrections along with a hefty sanction.
This year, the IRS and EBSA have updated their correction programs. The IRS updated the Employee Plan Compliance Resolution System (EPCRS) and the EBSA updated the Delinquent Filer Voluntary Compliance Program (DFVCP). The EBSA still maintains the Voluntary Fiduciary Compliance Program (VFCP), but an update for this correction program was not issued; the last formal update to that program was in 2006.
Please see full advisory below for more information.
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