US Department of Labor Employee Benefits Security Administration (EBSA)ĮBSA has two primary correction programs: Plus, the time involved in Audit CAP could be significantly more than VCP. That's why it's advantageous to correct under VCP rather than through Audit CAP. The sanction paid under Audit CAP should be higher than the amount they would have paid under VCP.
You might have to argue that decision with the auditor. An example of this would be if you chose to use the actual trust account earnings instead of the DOL's VFCP online calculator because the actual trust earnings resulted in a lower correction amount than you would have otherwise paid if you had used the VFCP online calculator. Once under audit, VCP is no longer available unless you can produce documentation that the correction is already in progress before the audit started.Īudit Closing Agreement Program (Audit CAP) - Audit CAP is what the IRS will use when they have identified compliance failures or errors that require some correction that was not already made using VCP or the correction that was made was not satisfactory.įor example, if you used SCP to correct a failure but the correction method used did not satisfy the auditor. VCP can only be used if the plan is not already under audit by a regulatory agency. This method is typically reserved for compliance failures that would be considered material because it impacts a significant portion of the participants or it's significant because of the dollar amount involved in the compliance failure. VCP requires filings and fees and a lot more procedural documentation. Voluntary Correction Program (VCP) - VCP on the other hand, does provide assurance that the issue is fully resolved and cannot introduce more problems later. So you could still be at risk even after you use SCP.
The SCP does not give you any assurance that your correction will be accepted if you are audited by a regulator. The IRS gives some latitude in the methods used to correct problems under SCP, but those correction methods should be documented in case they come up on audit later. It's simply fixing an administrative clerical error. Self Correction Program (SCP) - SCP requires no special filings or fees. Audit Closing Agreement Program (Audit CAP) - IRS website page.Voluntary Correction Program (VCP) - IRS website page.
IRS Employee Plans Compliance Resolution System (EPCRS) So, that's why we've created a general guide that can help you determine which program is most appropriate for your scenario.
#VFCP ONLINE CALCULATOR CODE#
The IRS, however, provides corrective programs that help plan sponsor comply with the Internal Revenue Code requirements.Ĭhoosing the proper correction program depends largely on the nature of the mistake. In general, the DOL is mostly concerned with protecting the rights of plan participants under Title I of the Employee Retirement Income Security Act (ERISA). Each agency has its own correction programs for different types of plan mistakes. There are two primary federal government agencies that provide programs for employers to correct plan mistakes - the Internal Revenue Service (IRS) and the US Department of Labor (DOL).
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