Certified Plan Sponsor Professional (CPSP) Practice Exam

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Prepare for the Certified Plan Sponsor Professional Exam. Use flashcards and multiple choice questions with full explanations. Achieve exam success!

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What program allows plan sponsors to correct plan failures with IRS approval?

VCP - Voluntary Correction Program
SCP - Self-Correction Program
EPCRS - Employee Plans Compliance Resolution System
IRP - Internal Review Program

The correct answer is: VCP - Voluntary Correction Program

The Voluntary Correction Program (VCP) is specifically designed to allow plan sponsors to correct operational failures and document their corrections with the IRS's approval. This program offers a formal process for addressing and resolving compliance issues, providing plan sponsors with the opportunity to maintain the tax-favored status of their retirement plans. By participating in VCP, plan sponsors can avoid potential penalties and ensure that necessary corrections are made in a timely manner, helping to protect the interests of their plan participants. Furthermore, using the VCP can be particularly advantageous in situations where a plan sponsor wants to ensure that their corrections are recognized and approved by the IRS, which lends additional security and compliance assurance compared to other methods. This program can lead to an overall enhancement in the plan’s operational integrity by providing a structured environment for making necessary corrections while proactively engaging with the IRS.