The Department of Labor (DOL) has issued a model notice for applicants to the Voluntary Fiduciary Correction Program (VFCP).
This notice is essential for informing plan participants that the plan has applied to utilize this important correction program. It is crucial to understand that this model notice is exclusively for applicants. It is not intended for use by those who are engaged in self-correction to rectify errors.
The issuance of this model notice follows the Employee Benefits Security Administration’s (EBSA) final rule released in January, which introduced significant changes to the VFCP that were originally proposed in November 2022.
Through the VFCP, fiduciaries can report specific administrative errors to the DOL and receive a no-action letter. These errors include prohibited purchases and sales, improper loans, and late contributions. The final rule highlights two critical new self-correction features. The first, articulated in section 7.1(b), covers failures to timely transmit participant contributions and participant loan repayments to pension plans. The second, detailed in section 7.3(c), addresses specific participant loan failures self-corrected under the IRS’s Employee Plans Compliance Resolution System (EPCRS).
Moreover, the updates to the VFCP and the amendments to Prohibited Transaction Exemption (PTE) 2002-51 are now in effect as of March 17, 2025.
This model notice firmly informs plan participants that the plan sponsor is actively participating in the DOL’s VFCP. It clearly outlines that the program is voluntary and is designed to empower plan administrators to correct potential breaches of Title I of the Employee Retirement Income Security Act (ERISA).
