Certified Plan Sponsor Professional (CPSP) Practice Exam

Improper payments of settlor expenses that are made using plan assets can be rectified through the Voluntary Fiduciary Correction Program (VFC). The VFC is designed to provide a mechanism for fiduciaries to correct certain errors in their management of employee benefit plans without facing penalties from the Department of Labor (DOL). This program encourages voluntary compliance and allows fiduciaries to correct mistakes related to transactions that could violate fiduciary responsibilities, including the improper use of plan assets for settlor expenses.

In the context of the VFC, settlor expenses relate to the costs incurred in establishing or terminating the plan and should not be paid with plan assets. The program offers a streamlined process for rectifying these types of errors when they occur, helping to avoid potential enforcement actions and ensuring that the plan is being managed in the best interests of the participants and beneficiaries.

Other programs, such as the Delinquent Filer Voluntary Compliance Program (DFVC), primarily focus on the late filing of plan documents, while the Employee Retirement Income Security Act (ERISA) Compliance Program deals with broader compliance issues under ERISA. The Self-Correction Program (SCP) aids in fixing operational compliance failures, but it does not specifically address the restitution of improper payments