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VFCP Can Save California Employers $$

May 9th, 2008 Posted by Amelia

The US Department of Labor recently announced a free workshop on VFCP, to be held in Santa Clarita, California.

Who should attend? According to the US DOL, any HR professional, owner or employer who would like to learn more about bringing their employee retirement accounts into compliance through VFCP.

This free event will be held in Suite 100 of the Small Business Development Center at the Santa Clarita Valley Chamber of Commerce, 28460 Avenue Stanford in Santa Clarita.

The half-day workshop will be held on Thursday June 19, 200 from 8:30 am to 10:30 am, with registration beginning at 8:00 am.

Employers can use this online form to register, or register by phone with Wendy Morgan at (626) 229-1032.

In 2002, the Voluntary Fiduciary Correction Program (VFCP) was established. In 2006, the VFCP was simplified and expanded.

The VFCP allows companies to comply with the ERISA (Employee Retirement Income Security Act) by voluntarily correcting certain law violations.

Workshop attendees will learn how to apply and be approved for this important program, potentially saving thousands of dollars in penalties and fines.

Using VFCP is beneficial to employers, because it allow them to correct past errors in employee retirement plan transactions and avoid prosecution. Employers have nineteen categories under VFCP they are allowed to correct. Among these nineteen types are:

Below Market Interest Rate Loans With Parties in Interest
Benefit Payments Based on Improper Valuation of Plan Assets
Below Market Interest Rate Loans With Non-Parties in Interest
Defaulted Participant Loans
Delinquent Participant Contributions and Participant Loan Repayments to Pension Plans
Fair Market Interest Rate Loans With Parties in Interest
Holding of an Illiquid Asset Previously Purchased by Plan
Improper Payment of Expenses by Planof Duplicate, Excessive, or Unnecessary Compensation
Purchase of Assets by Plans from Parties in Interest
Purchase of Assets from Non-Parties in Interest at More Than Fair Market Value
Sale of Assets by Plans to Parties in Interest

Companies eligible to utilize VFCP are those that may be responsible for violations related to employee benefit plans. Officials and sponsors of these plans are seeking exemption from policy enforcement by completing all VFCP procedures.

This exemption provided by the VFCP involves excise taxes, and in some cases, IRS penalties.

It may seem as though VFCP gives companies a “get out of jail free” card for financial defaults regarding employee benefit accounts, but that is not the case. Employers are required to correct all violations, completely and accurately, and provide documented proof that the violations have indeed been corrected. Companies that fail to meet these conditions can face legal action, including civil penalties, under Sections 502 (I) and 502 (i) of the ERISA.