Prohibited Transaction Exemption 2002-51 to Permit Certain Transactions Identified in the Voluntary Fiduciary Correction Program

The Employee Benefits Security Administration (EBSA) has published a proposed amendment to Prohibited Transaction Exemption (PTE) 2002-51. In conjunction with the proposed amendment, the U.S. Department of Labor (DOL) published an amendment statement of its Voluntary Fiduciary Correction Program (VFCP). Comments on the proposed rule are due by January 20, 2023. 

PTE 2002-51 exempts certain transactions identified in the DOL’s VFCP. Under the VFCP, individuals who may have breached a fiduciary duty under the Employee Retirement Income Security Act (ERISA) to correct their breach and avoid civil action and penalties from the DOL. PTE 2002-51 outlines an exemption from excise taxes imposed by the Internal Revenue Code (IRC) for certain eligible transactions corrected under the VFC Program. 

The amended and restated VFCP establishes a self-correction feature for some types of delinquent participation contributions and loan repayments to pension plans (“the SC component”). This amendment to the VFCP class exemption would allow excise tax relief for transactions corrected according to the SC component. The proposed amendment would clarify all existing transactions eligible for correction under the VFCP and expand the scope of other currently eligible transactions. Finally, the proposed amendment would simplify administrative or procedural requirements for participating in and correcting transactions under the VFCP.

HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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