Compliance January 8, 2002

PWBA Offers Timely Help on Late Contributions

August 1, 2002 (PLANSPONSOR.com) - The Department of Labor's Pension and Welfare Benefits Administration (PWBA) has published some additional guidance on how plan sponsors can right transactional errors regarding delinquent contributions.
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The guidance, provided in question and answer format, was developed in response to questions received by the PWBA following the implementation of the Voluntary Fiduciary Correction Program (VFCP) on a permanent basis earlier this year (see DoL Announces Voluntary ERISA Compliance Enhancements ).  The program allows plan officials, sponsoring employers, or parties to affected transactions to voluntarily correct specific violations of the Employee Retirement Income Security Act (ERISA). 

Applicants must fully correct any prohibited transactions, calculate any losses and restore those losses with earnings or profits, and distribute any supplemental benefits owed to eligible participants and beneficiaries.  If properly corrected, plan officials will receive a “no action” letter indicating there will be no further enforcement action by the Labor Department on the corrected transaction.
 
Among the transactions that can be corrected under the program are delinquent participant contributions to pension plans.
 
The document answers frequently asked questions (FAQ) about the application of the terms of the VFCP program to specific factual situations, and also offers hypothetical examples of acceptable calculations of lost earnings in particular situations.

Among the items addressed are:

  • How to determine when participant contributions are considered late
  • How to prepare a VFCP application in cases of late contributions
  • How to deal with a situation where contributions are late, but the amount is small
  • The use of the VFCP as an option for correcting a failure to forward participant loan repayments to a plan in a timely fashion
  • What rate of return to use in calculating earnings on delinquent contributions

Questions concerning this guidance may be directed to the VFCP coordinator in the appropriate PWBA office.
 

The VFCP program FAQs are online at http://www.dol.gov/pwba/faqs/faq_vfcp2.html , or you can obtain them by contacting a local regional PWBA office by calling the toll-free number 1-866-275-7922. 

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