The Employee Benefits Security Administration has released its final rule amending and restating the Voluntary Fiduciary Correction Program. This program permits eligible employer-sponsored pension and welfare benefit plans and plan fiduciaries to correct certain prohibited transactions without U.S. Department of Labor civil enforcement actions and civil penalties.

Among other changes:

  • The final rule adds a limited self-correction component (SCC) for certain failures to timely transmit participant contributions (and participant loan repayments) to employer-sponsored retirement plans.
  • It also implements Section 305(b)(2) and (3) of the SECURE 2.0 Act by adding a self-correction feature for certain participant loan failures that are self-corrected under the Employee Plans Compliance Resolution System published by the Internal Revenue Service.
  • Amendments to Public Transaction Exemption 2002-51 allow eligible plans to take advantage of relief provided by the program and PTE 2002-51 more than once every three years.
Previously, the program did not include any formal SCC or provide fiduciary relief with respect to any self-corrections. However, under the new SCC, the Employee Benefits Security Administration now allows employers and plan officials to self-correct two types of transactions in certain limited circumstances:
  • Delinquent participant contributions and loan repayments to employer-sponsored retirement plans remitted to the plan within 180 days of the date the delinquent contributions were withheld from payroll or received by the employer (provided the corresponding lost earnings total $1,000 or less) and
  • Eligible inadvertent participant loan failures.
Related: Navigating SECURE 2.0 confusion: collaboration between SMBs and third-party administrators

Recommended For You

“The SCC-Department of Labor’s response to the industry’s often-requested and long-awaited improvement to the VFC program falls significantly short of meeting industry expectations,” according to analysis by the law firm Morgan Lewis. “Unlike the self-correction program provided by the IRS under the Employee Plans Compliance Resolution System -- which makes available a true self-correction alternative that permits plan sponsors to self-correct certain qualification failures over a much longer period of time, without regard to the dollar amount of the failures and without requiring plan sponsors to report their self-corrections of those failures to the IRS -- the SCC appears to simply be a somewhat lighter, abbreviated version of the VFC program.”

However, the law firm did cite a benefit to the revised rule.

“Nevertheless, the SCC, coupled with the expansion of the relief from the code’s excise tax provisions under PTE 2002-51 to include self-corrections under the SCC, arguably is somewhat helpful for plan sponsors looking to correct isolated instances of delinquent participant contributions and loan repayments under their plans without being required to submit a formal application to the DOL under the VFC Program to obtain relief,” it said.

Both the final rule and the amendments to PTE 2002-51 will take effect on March 17.

NOT FOR REPRINT

© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Alan Goforth

Alan Goforth is a freelance writer in suburban Kansas City. In addition to freelancing for several publications, he has written a dozen books about sports and other topics.