Last month, the Department of Labor proposed updates to the Voluntary Fiduciary Correction Program, including adding a self-correction component for employers that fail to send 401(k) salary withholding contributions or loan repayments for participants on time.
These changes would also let employers notify the Department of Labor electronically that they self-corrected these issues.
For 401(k) plan sponsors, late deposits are one of most common compliance issues – and the Department of Labor has made it a priority to enforce it. Under the law, large employers have to deposit contributions as soon as possible – which is where the compliance issues occur, because sometimes this isn’t on the correct schedule.
Correcting these late deposits has been the most common correction of the Voluntary Fiduciary Correction Program.
Under the revised program, companies can use the new self-correction component for some late deposit failures (provided they meet certain conditions).
These new self-correction components will be available to plans of all sizes to use whenever they choose but only if certain requirements are met.
However, if there isn’t compliance with the self-correction components, there could be monetary penalties or civil enforcement actions from the Department of Labor.
There are several revisions, clarifications and updates from the DOL; you can read them here.
Do you still have questions about retirement planning options, or how your small business can participate?
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