Mistakes can happen. If a plan sponsor finds that their plan is not in compliance, there are several programs available that the Ryding Company can assist you with, to help correct problems and bring the plan back into compliance.
If you have a plan document that has not been amended to reflect the current requirements of the Internal Revenue Service and need assistance correcting and complying with current standards, or if you need help correcting your plan for the Employee Benefits Security Administration (EBSA), we will help you navigate through the complicated and ever-changing resolution processes.
If there are years in which your plan failed to file a Form 5500 (Annual Return/Report of Employee Benefit Plan), we will complete the appropriate forms for those years and file your Form 5500 via the appropriate corrections program.
Plan administrators are eligible to pay reduced civil penalties under these programs if the required filings are made prior to the date on which the plan administrator is notified in writing by the Department of Labor (Department) of a failure to file a timely annual report under Title I of the Employee Retirement Security Act of 1974 (ERISA).
We can also help you with some of the other common plan errors, such as participant loan failures (for example, loans that exceed the maximum permitted dollar amount), late or missed deposits of employee salary reduction contributions, specific plan prohibited transactions (for example, sales or loans between the plan and an interested party), or other various operational errors that arise from a failure to adhere to plan terms.
IRS Employee Plans Compliance Resolution System
If mistakes have been made with respect to a plan, Employers can use one of the programs available to correct their specific problem. They may use the IRS Employee Plans Compliance Resolution System (EPCRS) to remedy any mistakes and avoid the consequences of plan disqualification (or the consequences of disqualification of the 403(b) annuity contracts or custodial accounts of employees in the case of a 403(b) plan). The IRS EPCRS helps plan employers protect participant benefits and keep their plans in compliance with the Internal Revenue Code requirements. There are three ways to correct mistakes under EPCRS:
- Self-Correction Program (SCP)– permits a plan sponsor to correct certain plan failures without contacting the IRS or paying any fee.
- Voluntary Correction Program (VCP)– permits a plan sponsor to, any time before audit, pay a fee and receive IRS approval for correction of plan failures.
- Audit Closing Agreement Program (Audit CAP)– permits a plan sponsor to pay a sanction and correct a plan failure while the plan is under audit.
A failure to satisfy plan terms and applicable pension law may result in ineligibility of the plan, including the loss of tax exempt status for the trust, loss of tax deductions for the employer, and unexpected taxable income to plan participants. A correction for a mistake should be prudent and suitable. The correction method that is taken should resemble one that is already furnished in the Internal Revenue Code. Employers should thoroughly consider all facts and circumstances. This can be difficult to do without the assistance of facilitators who are knowledgeable and familiar with the current tax laws, codes and procedures. We are extremely familiar with these policies and can assist you in navigating the current requirements of the IRS’s EPCRS. Please note that the EPCRS encourages plan sponsors to correct plan errors earlier rather than later. Use of these programs are also more cost effective for the plan sponsor.
The Department of Labor (DOL) Employee Benefits Security Administration (EBSA) protects the resources of employee benefit plans under Title I of the Employee Retirement Income Security Act (ERISA). One significantly crucial area that the EBSA oversees is the significant tasks of those who exercise discretion over retirement and health plans.
EBSA has two voluntary self-correction programs for plan administrators who need help in meeting ERISA requirements:
- The Delinquent Filer Voluntary Compliance Program (DFVCP) assists late or missed Form 5500 filers in coming up to date with corrected filings.
- The Voluntary Fiduciary Correction Program (VFCP) affords plan sponsors and officials the chance to identify and fully correct certain transactions such as prohibited purchases, sales and exchanges, improper loans, delinquent participant contributions and improper plan expenses.
Mistakes won’t go away by themselves. Our goal is to help you to correct and comply with the law, minimize and reduce plan errors and protect participant benefits. We can help you identify and fix any plan mistakes, and allow for a more secure future for you and your plan participants!