Just Breathe! DOL Provides VFCP Relief just prior to Regulation Freeze

Sometimes, timing is everything. In a Presidential Memorandum dated January 20, 2025, the Trump Administration froze the issuance of agency regulations pending review. Thankfully, offering a parting gift, the Biden Administration’s Department of Labor (DOL), just five days earlier, had issued final regulations to its Voluntary Fiduciary Correction Program (VFCP) providing welcome relief to plan sponsors who wish to self-correct their errant plan administration. Those changes add a self-correction component for fiduciary failures and amend an existing prohibited transaction exemption providing excise tax relief on self-correction transactions. 

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Related Content

• Voluntary Fiduciary Correction Program Checklist
  Check out this VFCP checklist for step-by-step guidance for private employers on the use of the DOL's VFCP to correct and self-report fiduciary violations or ERISA prohibited transactions. The 2025 Amendments, which are effective March 17, 2025, modify the "under investigation" definition which could prohibit self-correction. They clarify that VFCP is available in cases where the Employee Benefits Security Administration (EBSA) has contacted the plan, the applicant, the self-corrector, or the plan sponsor in connection with a complaint so long as the agency inquiry does not concern the transaction being corrected.
• EPCRS and VFCP Plan Corrections Resource Kit
  Reference this resource kit for content to assist plan sponsors, their counsel, and other practitioners in correcting errors in tax-qualified retirement plans governed by the Internal Revenue Code and ERISA. The resource kit includes links to documents that address both the IRS Employee Plans Compliance Resolution System (EPCRS) and the VFCP.

Practical Guidance Updates 
Featuring the latest updates from your Practical Guidance account.    

• Employee Benefits & Executive Compensation Key Legal Developments Tracker (Current)
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  • ERISA. Trump Administration freezes issuance of proposed and final regulations pending review. The White House, Regulatory Freeze Pending Review.
  • ERISA. DOL issues guidance permitting fiduciaries of an ongoing retirement plan to transmit missing participant moneys to a state unclaimed property fund if (1) the present value of the participant’s vested benefit (disregarding any outstanding loan balance) does not exceed $1,000; (2) the fiduciary determines that the transfer is a prudent destination for the participant’s vested retirement benefit; and (3) the fiduciary has implemented a prudent program to locate missing participants. DOL Field Assistance Bulletin 2025-01.
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