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DOL Makes Improvements to Voluntary Fiduciary Correction Program
The department also provided plan fiduciaries with an option to help manage small benefit amounts owed to missing participants.
The Department of Labor announced Tuesday that the Employee Benefits Security Administration issued a final rule to update its Voluntary Fiduciary Correction Program, providing employers and plan administrators with more efficient ways to voluntarily correct compliance issues in retirement, health and other employee benefit plans.
The 2025 update adds a self-correction tool that employers and plan officials can use to remedy delays in sending participant contributions, such as employee payroll deductions and participant loan repayments to retirement plans.
According to EBSA, delinquent participant contributions are the type of transaction most frequently corrected under the program. Following a public comment period, EBSA agreed that a more streamlined self-correction feature for delinquent participant contributions, with appropriately designed safeguards, would encourage more voluntary corrections by employers and others in a position to correct a breach.
The VFCP is designed to encourage correction of fiduciary breaches and compliance with the law by allowing plan sponsors to avoid potential DOL civil enforcement actions and civil penalties by voluntarily correcting eligible transactions in a manner that meets the requirements of the program.
Employers and plan officials can use the self-correction component to voluntarily self-correct delinquent participant contributions and loan repayments to pension plans of any size if lost earnings total $1,000 or less.
Employers can also fix mistakes related to participant loans from retirement plans, as provided by the SECURE 2.0 Act of 2022.
In addition, EBSA’s 2025 update to the VFCP:
- Expands the scope of transactions eligible for correction;
- Clarifies transactions already eligible for correction;
- Simplifies administrative and procedural requirements; and
- Amends the Voluntary Fiduciary Correction Program class exemption so plan officials can avoid the imposition of excise taxes.
The updates will take effect on March 17.
Employee benefit plan sponsors and other officials who may be liable for fiduciary violations under the Employee Retirement Income Security Act can apply for relief from enforcement actions through the VFCP. However, they cannot apply if the plan is “under investigation.”
Applicants can use the VFCP without first consulting EBSA and simply need to follow the procedure outlined in the 2025 VFCP package. A full list of eligible transactions for correction can be found here.
Enforcement Relief on Missing Participant Retirement Benefits
EBSA also announced on Tuesday an enforcement relief policy to provide retirement plan fiduciaries with an option to help manage small benefit amounts owed to participants who cannot be located.
Under the policy, the DOL will not take action against ERISA fiduciaries who transfer to state unclaimed property funds entire benefit payments of $1,000 or less owed to missing participants, if certain conditions are met.
To qualify for relief, fiduciaries must meet the conditions set forth in the policy, including:
- Meeting conditions designed to protect the interests of the missing participants;
- Adopting best practices for locating missing participants and beneficiaries; and
- Selecting state unclaimed property funds that meet the minimum standards outlined in the policy.
“This policy gives fiduciaries an additional option for handling small outstanding retirement benefit payments owed to missing participants and beneficiaries,” said Assistant Secretary of Labor for Employee Benefits Security Lisa Gomez in a statement. “Our goal is to reunite participants and beneficiaries with their retirement benefits and this new policy will support fiduciaries’ ability to choose this option when prudent and provide individuals with another option for finding benefits that may be owed to them.”
More information about the policy can be found here.
The DOL also, at the end of last year, launched the public Retirement Savings Lost and Found Database, a tool designed to help workers and beneficiaries search for retirement plans that may still owe them benefits.