ASPPA Recommends Self Correction for Late Deferral Deposits

In a letter filed with the DoL’s Employee Benefit Security Administration (EBSA), Craig P. Hoffman, General Counsel and Director of Regulatory Affairs said: “ASPPA has been a strong supporter of the VFCP since its inception; however, we believe it would be greatly improved by the addition of a self-correction component that under certain circumstances would allow employers to self-correct the late deposit of elective deferrals. Plan sponsors, plan participants and DoL would all significantly benefit by permitting this approach.  

“We recommend adding a formal self-correction component for the late deposit of deferrals. This component would allow employers to correct in accordance with the current VFCP methodology without having to file an application with the Department. Instead, the employer would report that it self-corrected under VFCP and provide information on the correction as an attachment to Schedule H or I for the Form 5500, Annual Return/Report of Employee Benefit Plan.  

“We believe this proposal would assist DoL’s goals of ensuring timely deposits and in doing so protect plan participants and plan assets. We also believe the proposal would provide the necessary documentation and certainty that late deposits have been fully corrected. By simplifying and expanding participation through a self-correction component, DoL would be able to verify the important role VFCP plays with respect to the many plan sponsors, who self-correct in accordance with, and as a direct result of VFCP, but are not counted in the ‘official’ statistics.”