VFCP—a program to help benefit employers

In recent years, the Employee Retirement Income Security Act (ERISA) has given employers instructions and provided them information about how to comply with federal benefits laws. At the same time, it also set rules on how employers must manage their employee retirement and benefit plans. Generally speaking, employers who violate these rules will fines and penalties. Employer utilization of the “VFCP” is one way to reduce or eliminate the risk of such adverse consequences.

The Voluntary Fiduciary Correction Program (VFCP) is designed to encourage employers to voluntarily comply with the ERISA by self-correcting certain violations of the law. Many workers can benefit from the program as a result of the increased retirement security associated with restoration of plan assets and payment of additional benefits.

Participating in VFCP can save employers a large amount of money in taxes, fees and penalties. Any employer who may be liable for fiduciary violations under ERISA may be eligible to use VFCP, giving them an opportunity to identify and correct problems and certain violations of the law with employee benefit accounts. However, companies must completely and accurately correct all violations, as well as provide proof that the violations were all corrected; those who don’t may still be subject to enforcement actions, including civil penalties, according to ERISA Sections 502 (I) and 502 (i).

The VFCP was begun in 2002 and was expanded in 2006. Now Employers can correct their past errors in 19 categories of transactions.

“The VFCP is an effective strategy in protecting the pension benefits of America’s workers,” said Billy Beaver, director of the ERISA’s San Francisco Regional Office. “Through this voluntary program, EBSA helps employers resolve issues related to employee benefit plans that they sponsor.”