The updates proposed Friday would be the first to the VFCP since 2006 and enhance an already successful program, said Lisa M. Gomez assistant secretary for employee benefits security, in a call with reporters.
Since the program went live in 2002, the Labor Department's Employee Benefits Security Administration has processed about 27,500 applications and restored $762 million to plans, including fielding 1,374 applications and restoring $5 million in fiscal year 2022, Ms. Gomez said.
While VFCP is designed to encourage employers to voluntarily comply with ERISA by self-correcting certain violations, employers currently have to fill out an application, provide documentation and wait for EBSA approval in order to rectify a delinquent participant contribution.
The proposal would allow employers to instead notify EBSA electronically that they have self-corrected certain failures to send participant contributions and loan repayments to retirement plans on time, so long as certain conditions are met:
- The delinquent participant contributions or loan repayments must be remitted to the plan no more than 180 calendar days from the date of withholding or receipt.
- Lost earnings must not exceed $1,000 calculated from date of withholding or receipt.
- The plan or self-corrector must not be under investigation as defined in the program.
- Self-correctors must use the program's online calculator to calculate lost earnings and an online web tool to complete and file the self-correction component notice. Self-correctors must also complete and retain the self-correction retention record checklist.
"EBSA expects that a well-designed self-correction feature will mean more voluntary corrections and more participant accounts receiving more timely correction amounts," EBSA said in the proposal.
A senior department official on the call with reporters said most delinquent participant contributions are below the $1,000 threshold, though the official added that the proposal's public comment period will help determine whether the thresholds should be adjusted.
"The fact that we have a successful program doesn't mean it can't be improved," Ms. Gomez said. "I'm looking forward to reading the feedback from commenters and hearing the ways in which the program can be even more effective in achieving its goals."
The proposal will have a 60-day comment period after publication in the Federal Register on Nov. 21.