DOL Shifts Focus of Enforcement Letter Following ARA 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.

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