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Department of Labor Voluntary Fiduciary Correction Program Updates

  • Writer: Boutwell Fay
    Boutwell Fay
  • Mar 26
  • 2 min read

Updated: Mar 27


On Tuesday, January 14th, the Employee Benefits Security Administration (EBSA) issued final rules for the Voluntary Fiduciary Correction Program (VFCP) and the related Prohibited Transaction Exemption (PTE) 2002-51. The final rules took effect on March 17, 2025. The new rules are intended to reduce administrative complexity by eliminating the need for a formal “no-action” letter, replacing it with an electronic notice submission and automatic acknowledgment from the EBSA, but are limited in scope.  Plan fiduciaries who are not eligible for the streamlined program may still use the “classic” form of the VFCP program.


The key updates include the introduction of a Self-Correction Component (SCC), which allows fiduciaries to rectify specific issues without submitting a full VFCP application. Instead, a streamlined SCC notice can be filed electronically, covering delinquent participant contributions and inadvertent participant loan failures. For delinquent participant contributions, employers can self-correct late remittances of employee contributions or loan repayments to pension plans if the lost earnings total $1,000 or less and the correction is made within 180 days of the delinquency.

The rule also provides excise tax exemption relief from certain provisions of the Internal Revenue Code (IRC) if all requirements of the VFCP and the exemption are met. The primary prohibited transaction exemptions eligible for the Self-Correction Component (SCC) include:


  • Failure to timely remit participant contributions or participant loan repayments to plans

  • Loans made at a fair market interest rate by plans to a disqualified person\


The previous three-year limitation on using the exemption for similar types of transactions has also been removed. Additionally, the final rule clarifies acceptable calculation methods for restitution to the plan, participants, and beneficiaries in cases where a breach has occurred, and correction is required. The Department of Labor’s (DOL) online calculator assists with calculating correction amounts owed to the plan or participants and beneficiaries when used in the VFCP program. 


 

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