1. What is a Voluntary Fiduciary Correction Calculator?

Definition: This calculator determines the correction amount needed when fiduciary breaches occur, calculating the lost earnings or profits.

Purpose: It helps fiduciaries determine the appropriate correction amount to restore plans to their proper financial position.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( C \) — Correction amount (USD)
• \( P \) — Principal amount (USD)
• \( r \) — Interest rate (decimal)
• \( t \) — Time period (years)

Explanation: The formula calculates the compound interest that would have been earned on the principal amount during the specified time period.

3. Importance of Fiduciary Correction Calculation

Details: Accurate correction amounts ensure compliance with ERISA regulations and proper restoration of plan participants' accounts.

4. Using the Calculator

Tips: Enter the principal amount in USD, interest rate as a decimal (e.g., 0.05 for 5%), and time period in years. All values must be > 0 (except rate can be 0).

5. Frequently Asked Questions (FAQ)

Q1: What interest rate should I use?
A: Use the plan's actual rate of return or the DOL's Voluntary Fiduciary Correction Program (VFCP) rates if applicable.

Q2: How is the time period determined?
A: Use the exact time (in years) from when the breach occurred until the correction date.

Q3: What if the breach affected multiple transactions?
A: Calculate each transaction separately or consult the VFCP Online Calculator for complex scenarios.

Q4: Does this include any penalties?
A: No, this calculates only the lost earnings. Penalties would be separate if applicable.

Q5: Where can I find official guidance?
A: Consult the Department of Labor's Employee Benefits Security Administration (EBSA) website.