Voluntary Fiduciary Correction Program Improvements Take Effect

The Department of Labor’s 2025 updates to the 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—went into effect earlier this week.

The 2025 update, which became effective on March 17, adds a self-correction tool that allows employers and plan officials to fix delays in sending participant contributions, such as employee payroll deductions and participant loan repayments to retirement plans.

The DOL issued a model notice to program applicants on March 18 to confirm their plan has applied to participate.

Following a public comment period in late 2022, 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 retirement plans of any size if lost earnings total $1,000 or less.