Certified Plan Sponsor Professional (CPSP) Practice Exam

Which corrections program allows plan sponsors to correct plan failures without a fee if the correction is made during the correction period?

1. Self-Correction Program (SCP)

2. Voluntary Correction Program (VCP)

3. Delinquent Filer Voluntary Compliance Program (DFVC)

4. Audit Compliance Program (ACP)

The correct answer is: Self-Correction Program (SCP)

The Self-Correction Program (SCP) allows plan sponsors to correct certain plan failures without having to pay a fee, provided that the correction is completed during the designated correction period. This program is part of the IRS's Employee Plans Compliance Resolution System (EPCRS) and is designed to encourage voluntary compliance with the Internal Revenue Code provisions that govern retirement plans. The appeal of the SCP lies in its ease of use for plan sponsors. When a failure is identified, a plan sponsor can self-correct errors without the involvement of the IRS or the need to pay penalties, as long as they rectify the issue within a specified time frame. This framework not only promotes compliance but also reinforces the importance of maintaining proper plan operations and adherence to regulations. In contrast, other programs, such as the Voluntary Correction Program (VCP), often require a fee to submit a correction request to the IRS. The Delinquent Filer Voluntary Compliance Program (DFVC) deals specifically with missed filing deadlines rather than general plan failures. The Audit Compliance Program (ACP) focuses on plans under audit, requiring different conditions and guidelines for compliance. Each of these options serves distinct purposes within retirement plan compliance, but the SCP stands out as the only program highlighted in the question