Can I use the VFCP to correct a failure to forward participant loan repayments to a plan in a timely fashion?
Yes. In Advisory Opinion 2002-2A, the department concluded that, while not subject to the participant contribution regulation (29 C.F.R. 2510.3-102), participant loan repayments paid to or withheld by an employer for purposes of transmittal to an employee benefit plan are sufficiently similar to participant contributions to justify, in the absence of regulations providing otherwise, the application of principles similar to those underlying the final participant contribution regulation for purposes of determining when such repayments become assets of the plan. Specifically, the Advisory Opinion concluded that participant loan repayments paid to or withheld by an employer for purposes of transmittal to the plan become plan assets as of the earliest date on which such repayments can reasonably be segregated from the employers general assets. Given the similar treatment of participant contributions and loan repayments, the department has determined that it is appropriate to permit delinque
