The U.S. Department of Labor has announced updates to its Voluntary Fiduciary Correction Program (VFCP) through the Employee Benefits Security Administration (EBSA). These updates aim to provide employers and plan officials with more efficient methods for correcting compliance issues in retirement, health, and other employee benefit plans.
A notable change is the introduction of a self-correction tool. This tool allows employers and plan officials to address delays in sending participant contributions, such as payroll deductions and loan repayments, to retirement plans. Additionally, it facilitates the correction of errors related to participant loans from retirement plans, as outlined by the SECURE 2.0 Act.
Assistant Secretary for Employee Benefits Security Lisa M. Gomez stated, “The Employee Benefits Security Administration is pleased to provide these improvements to our Voluntary Fiduciary Correction Program so that employers and other plan officials can take advantage of streamlined tools to correct legal violations, and America’s workers get full protection for their hard-earned benefits.”
The VFCP encourages voluntary corrections by employers and plan officials to avoid potential civil enforcement actions and penalties under the Employee Retirement Income Security Act and the Internal Revenue Code.
Key aspects of EBSA's 2025 update include:
- Expanding the scope of transactions eligible for correction.
- Clarifying transactions already eligible for correction.
- Simplifying administrative and procedural requirements.
- Amending Prohibited Transaction Exemption 2002-51 to help plan officials avoid excise taxes.
These amendments are published in today's Federal Register and will take effect on March 17, 2025. EBSA has also released a fact sheet detailing these changes, explaining how to use the new self-correction tool, and providing contact information for questions regarding the program.
