The Department of Labor on Jan. 14 finalized a rule to expand its Voluntary Fiduciary Correction Program.
Established in 2002, the program allows ERISA-covered plan sponsors to self-correct certain errors in a timely manner while avoiding potential DOL civil enforcement actions and civil penalties. Notably, the errors include failure to send employee contributions or participant loan repayments to retirement plans.
The amendments the DOL’s Employee Benefits Security Administration finalized on Jan. 14 are aimed at simplifying and expanding the program to make it easier to use and more useful for employers and others who wish to avail themselves of the relief provided, the DOL said.
Among the changes, the DOL added a self-correction tool that employers and other plan officials can use to remedy delays in sending participant contributions, such as employee payroll deductions, and participant loan repayments to retirement plans. The creation of the self-correction tool was part of SECURE 2.0, a comprehensive retirement security package Congress passed in 2022.
The DOL also expanded the scope of transactions eligible for correction and clarified transactions that are already eligible for correction, according to a fact sheet.
Separately, the DOL amended the VFCP class exemption, Prohibited Transaction Exemption 2002-51, so plan officials can avoid the imposition of excise taxes.
“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,” said Assistant Secretary for Employee Benefits Security Lisa M. Gomez, in a statement.
The DOL initially issued the proposal to expand the VFCP in November 2022.
The final amendments will take effect on March 17.