DOL Shifts Focus of Enforcement Letter Following ARA Comments

By Nevin Adams • July 12, 2018 • 0 Comments
Comments from the American Retirement Association have led to changes in a DOL Enforcement letter.

Last month we reported that a regional office of the Employee Benefit Security Administration had been issuing letters threatening enforcement actions against plan sponsors who reported the late deposit of participant contributions or loan repayments without making a formal submission under the DOL’s Voluntary Fiduciary Correction Program (VFCP).

In those letters, the DOL threatened “alternative enforcement measures” if the plan sponsor did not file a VFCP submission within 60 days. Needless to say, the ARA Government Affairs Committee (GAC) found such threats to be entirely inappropriate given the voluntary nature of VFCP. In a comment letter filed with the DOL Director of Enforcement, Mabel Capolongo, the American Retirement Association requested that the practice be stopped immediately.

In follow-up discussions with the DOL, GAC learned that the wording describing the potential for “alternative enforcement measures” was intended for plan sponsors who reported a fiduciary violation had occurred without a correction being made. In view of the concerns about protecting participant interests, DOL’s interests in considering further enforcement actions against plan fiduciaries who had not corrected a fiduciary violation was understandable.

As a result of the ARA comments, going forward the threat of alternative enforcement measures will be limited to plan sponsors where the late deposit violation has not been corrected.




Comments (3)

Yeah but - finding the problem in one year and correcting in another is quite common! How will they know correction is underway?
7/13/2018 3:15 PM
Jim Nolan
We contacted the DOL upon receipt of these letters in 2017 by several of our plan sponsors. We informed the DOL that all late contributions had been ... Read more
7/13/2018 3:09 PM
Jim Sharp
So, how does the DOL know if the violation has been corrected? I do not believe that is in the Form 5500.
7/13/2018 2:49 PM
Rick Thompson