Certified Plan Sponsor Professional (CPSP) Practice Exam

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How long must changes be corrected after IRS approval under the VCP?

90 days
150 days
180 days
1 year

The correct answer is: 150 days

The correct answer is that changes must be corrected within 150 days after IRS approval under the Voluntary Correction Program (VCP). This timeframe is established to ensure that plan sponsors proactively address any compliance issues identified during the VCP process. The VCP is an essential mechanism for plan sponsors to correct mistakes in their retirement plans and receive IRS approval for those corrections. The 150-day period provides a structured timeline for plan sponsors to implement necessary changes and ensure that their plans remain compliant with the Internal Revenue Code and ERISA regulations. During this period, it is crucial for plan sponsors to communicate with all relevant parties involved in the plan to carry out the corrections efficiently. Adhering to this timeframe not only demonstrates the sponsor's commitment to compliance but also protects employees’ benefits and maintains the tax-qualified status of the retirement plan.