To encourage retirement plan fiduciaries to bring plans into compliance with the Employee Retirement Income Security Act (ERISA), the Employee Benefits and Securities Administration(EBSA) administers the Voluntary Fiduciary Correction Program (VFCP). In 2021, the VFCP resulted in the recovery of $34 million for plans, participants and beneficiaries.
Proactive Compliance
From acting on the Department of Labor’s cybersecurity guidance to implementing the recommendations on finding missing participants—and more–retirement plan sponsors are trusted to make sure each participant and each beneficiary receives each dollar due to them. That’s why ERISA law holds everyone with a role in managing retirement plans to high standards—which are actively enforced by the Department of Labor and its EBSA division. In 2021, for example, EBSA reports recovering a total of nearly $2.5 billion on behalf of retirement plan participants and beneficiaries. Over one thousand civil investigations were completed and most ended with both monetary and corrective findings.
Plan fiduciaries who become aware of ERISA violations can proactively seek to course correct, bringing the plan into compliance. In many instances, using EBSA’s Voluntary Fiduciary Correction Program (VFCP) and/or Delinquent Filer Voluntary Compliance Program (DFVCP) enables fiduciaries to address violations—and curtail the disruption and expense of investigations, penalties and litigation. As Plan Sponsor explains:
The agency notes in its report that the VFCP and Delinquent Filer Voluntary Compliance Program (DFVCP) encourage the correction of ERISA violations by providing significant incentives for fiduciaries and others to self-correct. The VFCP allows plan officials who have identified specific ERISA violations to take corrective action without becoming the subject of an enforcement action. In FY 2021, ESBA received 1,201 applications for the VFCP. Additionally, the DFVCP, which encourages plan administrators to bring their plans into compliance with ERISA’s filing requirements, received 22,553 reports.
While EBSA often pursues voluntary compliance to correct violations and restore losses to employee benefit plans, in cases where voluntary compliance efforts have failed, or are inappropriate, the agency forwards a recommendation to the solicitor of labor to initiate litigation. Both the EBSA and the solicitor of labor determine which cases are appropriate for litigation, after considering the ability to obtain meaningful relief through litigation, the cost and the viability of other enforcement options. In FY 2021, 70 cases were referred for litigation. Even after referral to the solicitor of labor for litigation, the department can often resolve claims for monetary relief without filing suit.
ERISA Bonds and Protection Too?
It is a DOL requirement to have a current ERISA Fidelity Bond. Inadequate ERISA bond coverage can trigger investigations, acting as an indicator of the potential for carelessness with the plan. Failure to have a current ERISA fidelity bond that appropriately covers the retirement plan at all times puts plan sponsors at risk. Consequences include increased likelihood of a Department of Labor (DOL) audit, lawsuits—and even being held personally liable for losses. As a national leader in the field, Colonial can help you with the required ERISA Bond for the plan —and much more. We offer comprehensive coverage to help plan sponsors protect the plan, the company—and themselves. Just select an affordable package and receive:
- The ERISA bond required toprotect the assets of the retirement plan from theft. Colonial even includes extended coverage to ensure your ERISA bond remains US Department of Labor compliant.
- Fiduciary Liability coverage to protect you and your assets from personal liability.
- Cyber Liability coverage to safeguard your company and plan from covered losses and expenses in the event of a cyber breach.
Colonial makes it so easy, fast, and affordable to quote and purchase your coverage package that you can do it right now, in minutes: Plan Sponsor Package Here.
Are Your Personal Assets Exposed?
The ERISA bond required for the retirement plan does not cover you—the plan sponsor— as the fiduciary. Uniquely, Colonial offers plan sponsors up to $1,000,000 of affordable fiduciary liability insurance. Our 2 or 3-year packages provide the greatest overall savings and protection. In addition to fiduciary liability coverage, you receive cyber liability insurance to safeguard your company and plan from covered losses and expenses in the event of a cyber attack.
Obtain Your Package With Fiduciary Liability Insurance Here!
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