DOL and IRS to Coordinate on Plan Loan Corrections

July 5, 2006 – A representative of the Department of Labor’s Employee Benefits Security Administration (EBSA) stated last week that EBSA will be attempting to coordinate closely with IRS in the correction of compliance failures associated with loans from retirement plans.

Speaking to members of the American Law Institute-American Bar Association (ALI-ABA), the EBSA representative affirmed recent EBSA guidance under its Voluntary Fiduciary Correction Program (VFCP) that states that the correction of participant loan violations is to begin with the IRS’s Employee Plans Compliance Resolution System (EPCRS). Once IRS has issued an EPCRS compliance statement to the plan for its correction of the violation, a copy of this statement and proof of any required payment is to be provided to EBSA.