Is your employee benefits plan on target? Or do you worry that perhaps, without intending to, you have included some violations in the plan? Well, the U.S. Department of Labor's Pension and Welfare Benefits Administration (PWBA) wants to help you "quickly and completely" correct some violations you may have regarding the Employee Retirement Income Security Act (ERISA).
The pension agency announced its Voluntary Fiduciary Correction (VFC) Program for Employee Benefit Plans. According to Secretary of Labor Alexis M. Herman, "This program gives employers and plan service providers an opportunity to dedicate their efforts to making plans and participants whole, rather than worrying about fines and penalties if they act to identify and correct problems
before we find them. In the end, it benefits both workers and employers." The plan allows any plan official, sponsoring employer, or parties to affected transactions a chance to "undo any prohibited transactions, calculate any losses and restore any losses with interest or profits, and distribute any supplemental benefits owed to eligible participants and beneficiaries."
Transactions allowed under the program include:
o Repayment of delinquent employee contributions.
o Certain normally prohibited loans
o Loans with inadequate collateral or security
o Certain improper sales or purchases, including prohibited transactions
o Improper valuation of assets that affect benefits
o Payment of excessive or duplicate plan expenses
Problems must be corrected
PWBA warns that those attempting to use the program to correct problems must be certain to fully correct the fiduciary violations, otherwise they may be rejected and become subject to enforcement action and civil penalties. Also, the agency may conduct investigations to determine compliance with the program. The agency also notes that persons involved in pending investigations or criminal violations cannot take advantage of the program.
Information about the plan can be obtained from any of the 10 PWBA regional offices. The agency says that "one must submit a written narrative and supporting documents describing the transaction and its correction, proof of restoration of losses, a written notice to plan participants, and an executed penalty of perjury statement." People should probably contact their legal representative to draw up these documents. One other reminder: You must address these problems before PWBA finds them. PWBA expects to operate the program indefinitely but may change the program based on comments from the public. If you are interested in commenting, you can contact the PWBA's VFC Program either by writing to them at the U.S. Department of Labor, Room N5702, 200 Constitution Avenue NW, Washington, DC 20210 or via e-mail to email@example.com
Reprinted from "Best Practices in Compensation & Benefits" with permission of the publisher, Business & Legal Reports, Inc. Copyright 2000, BLR. --