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Release Date: 03/27/2002
Release Number: 02-177
Contact Name: Gloria Della
Phone Number: 202.693.8666
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Washington, DC - The U.S. Department of Labor today announced two programs
to make it easier for employers and plan officials to correct certain violations
with employee benefit plans and voluntarily comply with the Employee Retirement
Income Security Act.
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Secretary of Labor Elaine L. Chao said, “Today we are announcing another
phase of the department’s comprehensive approach to making compliance
assistance a simpler, easier way to do business with the government. These
two new programs have the added value of making workers’ health and retirement
benefits safer by helping employers implement crucial safeguards.”
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“Voluntary compliance with the law benefits both workers and employers,”
said Ann L. Combs, Assistant Secretary of Labor of the Pension and Welfare
Benefits Administration. “Employers will have an incentive to bring their
plans into compliance if they can avoid enforcement actions, civil monetary
penalties and prohibited transaction excise taxes. Workers’ retirement
security is enhanced when plans are brought into compliance and assets are
restored. The voluntary compliance program announced today will promote
and facilitate voluntary correction of ERISA violations.”
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Under the Voluntary Fiduciary Correction
Program (VFCP), plan officials,
sponsoring employers or parties to affected transactions may apply for certain
relief in connection with their voluntary correction of specific violations of
the law. Applicants must fully correct any prohibited transactions,
calculate any losses and restore those losses with interest 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.
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To address concerns about the excise tax, the department also published a
proposed class exemption to provide limited relief from the excise tax imposed
on prohibited transactions under the Internal Revenue Code. The relief
would apply to four transactions included in the VFCP as long as plan
officials comply with the conditions of the exemption. The proposed
exemption is available for use immediately while the department accepts public
comments. The IRS has advised it will not impose excise taxes on
transactions covered by the program.
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Another program, known as the Delinquent Filer Voluntary Correction Program
(DFVC),
established in April 1995, encourages plan administrators to file overdue annual
reports by paying reduced penalties. The program has been updated to
substantially reduce the penalty amounts for delinquent Form 5500 reports and
make it easier to participate in the program. The changes are intended to make
the program more attractive, especially to small businesses, as a way to bring
plans into compliance with the law.
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“We are particularly pleased to announce that the IRS and PBGC have agreed
to join us in providing certain penalty relief for delinquent filers that
participate in this program,” said Combs.
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For more information about the fiduciary correction program, the employers
and the benefit community can contact a local regional office by calling the
Toll-Free Employee & Employer Hotline: 1.866.275.7922. Questions on the delinquent filer program
should be directed to 202.693.8360.
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U.S. Department of Labor
news releases are accessible on the Internet. The information in this news
release will be made available in alternate format upon request (large
print, Braille, audio tape or disc) from the Central Office for Assistive
Services and Technology. Please specify which news release when placing
your request. Call 202.693.7773 or TTY 202.693.7775.
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