Earlier today, the U.S. Department of Labor (DOL) published in the Federal Register an updated version of the Voluntary Fiduciary Correction Program (VFCP) under Title I of ERISA. Per the DOL, VFCP “is designed to encourage correction of fiduciary breaches and compliance with law by permitted persons to avoid potential [DOL] civil enforcement actions and civil penalties if they voluntarily correct” errors in accordance with the program. Notably, the update expands the current VFCP by adding a much-anticipated self-correction component for delinquent transmittal of participant contributions and loan repayments to retirement plans in specific circumstances.
Additionally, the updated VFCP provides a self-correction procedure for eligible inadvertent failures of participant loan transactions. Further, the DOL issued a corresponding amendment to Prohibited Transaction Exemption (PTE) 2002-51, which will provide excise tax relief for self-corrected delinquent contributions, similar to the relief that was already afforded to VFCP applicants who received a no-action letter. Both the updated version of the VFCP and the amendment to PTE 2002-51 will be effective on March 17, 2025.
If you have any questions about the updated VFCP or potential errors that may need to be corrected, please contact a member of our Employee Benefits team. More information regarding these important changes will be forthcoming on our HR Law Talk blog.