The U.S. Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) has issued proposed updates to its Voluntary Fiduciary Correction Program (VFCP). Notice of the proposed updates allows 60 days for public comments, expiring on January 20, 2023. The existing features of the VFCP will remain in place until EBSA publishes final revisions to the VFCP in the Federal Register.
EBSA’s VFCP originated in 2002 and underwent significant simplification and updates in 2006. The purpose of the VFCP is to encourage employer compliance with the Employee Retirement Security Income Act (ERISA) by voluntarily correcting inadvertent legal violations. The VFCP covers various transactions, explains how employers can take advantage of the voluntary correction mechanism, and sets forth acceptable methods for correcting violations. Voluntarily correcting covered ERISA violations can help employers and employee benefit plan sponsors avoid civil enforcement actions and penalties for non-compliance.
The updates will make the following changes to the VFCP:
- Clarify that some existing transactions are eligible under the VFCP;
- Expand the scope of some other transactions currently eligible for correction under the VFCP;
- Simply procedural and administrative steps under the VFCP;
- Amend the associated prohibited transaction class exemption (PTE 2002-51) and
- Create a self-correction reporting component for VFCP.
- Late remittances of contributions or repayments to the plan must occur no more than 180 calendar days from the date that they were withheld or received;
- Lost earnings calculated from the date of withholding or receipt must not exceed $1,000; and
- Neither the plan nor the self-correcting person or entity can be under investigation at the time of the self-correction.
