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VFCP Can Save California Employers Thousands

May 7th, 2008 Posted by Amelia

The Employee Retirement Income Security Act (ERISA) sets the rules on how employers manage their employee retirement and benefit plans. Companies who violate these rules are subject to fines and penalties, unless they utilize the VFCP.

Participating in VFCP can save employers in California thousands of dollars in taxes, fees and penalties. Now employers can learn more about this exciting program at a free seminar sponsored by the U.S. Department of Labor.

On Monday June 9, 2008 the US DOL will host a VFCP workshop for employers at the Courtyard Foothill Ranch Irvine Spectrum, on Portola Parkway. The event runs from 8:30 am to 10:30 am, with registration at 8:00 am.

The event is limited to 100 participants, on a first-come first-served basis, so register early using this online form. For more information, or to register by phone, call Wendy Morgan at (626) 229-1032.

The VFCP (Voluntary Fiduciary Correction Program) was established in 2002. In 2006, the VFCP was expanded and streamlined, and allows businesses to avoid prosecution for ERISA violations by voluntarily correcting those violations. Nearly twenty separate categories of transactions can be corrected under the VFCP, including:

Participant Loans Failing to Comply with Plan Provisions for Amount, Duration, or Level Amortization
Defaulted Participant Loans
Purchase of Assets by Plans from Parties in Interest
Sale of Assets by Plans to Parties in Interest
Sale and Leaseback of Property to Sponsoring Employers
Purchase of Assets from Non-Parties in Interest at More Than Fair Market Value
Sale of Assets to Non-Parties in Interest at Less Than Fair Market Value
Holding of an Illiquid Asset Previously Purchased by Plan
Benefit Payments Based on Improper Valuation of Plan Assets
Payment of Duplicate, Excessive, or Unnecessary Compensation
Improper Payment of Expenses by Plan
Payment of Dual Compensation to Plan Fiduciaries

The VFCP is not a pass, however, for employers to get out of accepting responsibility for their ERISA violations. The VFCP has certain criteria and procedures that must be followed. To exempt themselves from enforcement actions resulting from these violations, the companies must completely and accurately correct all violations. In addition, the employers must provide proof that the violations were all rectified.

Employers using the can be granted relief from excise taxes, and in some cases, relief from penalties by the IRS. The VFCP covers the employers, the sponsors of the employee benefit plan, the parties in interest and the officials. Failure to comply with the VFCP protocols and rules can result in sanctions against the employer, including civil penalties, as stated in ERISA Sections 502 (I) and 502 (i).