The U.S. Department of Labor has developed a standard form and a Web-based tool for employers who want to report benefit plan administration errors.[@@]
The Labor Department is expanding the existing Voluntary Fiduciary Correction Program in an effort to help employers who miss payment deadlines or violate other rules and come forward to make amends without prodding from government officials.
Labor Department officials are predicting that about 700 employers will participate in the correction program each year, but they note in a preamble to a regulation implementing the changes, which appears today in the Federal Register, that program participation has been increasing rapidly.
To participate in the program, employers, benefits advisors or other plan “fiduciaries” who participate must explain what they did wrong, correct any violations, pay enough to the plan to make the plan whole and distribute any supplemental benefits owed to eligible participants and beneficiaries, Labor Department officials write in the regulation preamble.
In the past, officials write, one obstacle has been fiduciaries’ uncertainty about how they should apply for participation in the correction program. The correction program regulation includes a model sample form.
Some employers, including those who are correcting breaches that involves less than $50,000, now can send “summary documentation” rather than the extensive plan information required in the past, officials write.
The Employee Benefits Security Administration, the Labor Department agency that runs the program, also has developed an “online calculator” to help employers determine how much they most pay to correct plan errors.
Another correction program change will let employers or other “parties in interest” use the correction program to make amends if they end up buying poorly performing “illiquid assets” from benefit plans. Interested parties can use the voluntary correction program to deal with purchases of illiquid assets from plans only if “the asset cannot immediately be sold for its original purchase price, or its current fair market value, if greater,” officials write.
Illiquid assets covered by the change could include “restricted and thinly traded stock, limited partnership interests, real estate and collectibles,” officials write.
The regulation takes effect immediately, but the Labor Department says it would like to see public comments about other ways to improve the voluntary correction program.
The proposed regulation is on the Web at http://a257.g.akamaitech.net/7/257/2422/01jan20051800/edocket.access.gpo.gov/2005/pdf/05-6627.pdf