Employers and plan administrators will soon have an easier way to address compliance issues in retirement, health, and other employee benefit plans. This development aims to help them avoid potential federal enforcement actions and fines.
The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) has announced updates to its Voluntary Fiduciary Correction Program (VFCP). These updates were published in the Federal Register on January 15 and will take effect on March 17.
A significant update is the introduction of an online self-correction tool. Employers and plan officials can use this tool to address delays in sending participant contributions, such as employee payroll deductions, and participant loan repayments to retirement plans.
Delinquent participant contributions are payments retained by employers beyond the allowed time for remitting them to the retirement plan. These are the most frequently corrected under the program. The new rule permits employers to voluntarily self-correct participant contributions and loan repayments if total lost earnings do not exceed $1,000.
Additionally, employers and plan officials can correct mistakes related to participant loans from retirement plans as provided by the SECURE 2.0 Act.
Self-correctors must notify EBSA of their actions by submitting a notice with required information through EBSA’s web tool. Unlike the current VFCP application process, self-correctors will receive an email acknowledgment instead of a “no action” letter.
The VFC Program encourages correction of fiduciary breaches and compliance with the Employee Retirement Income Security Act of 1974. It allows employers to avoid potential Department of Labor civil enforcement actions and penalties if they voluntarily correct eligible transactions according to program requirements.
Further details about transactions eligible for self-correction are available in the EBSA fact sheet.
