DOL Publishes New VFCP Model Participant Notice
The Department of Labor on March 18 issued a model notice for applicants to the Voluntary Fiduciary Correction Program to use in letting plan participants know that the plan has applied to use the program.
The Department of Labor (DOL) on March 18 issued a model notice for applicants to the Voluntary Fiduciary Correction Program (VFCP) to use in letting plan participants know that the plan has applied to use the program.
The DOL notes that the model notice is only intended for applicants to use. It is not intended for those employing self-correction to use in order to fix errors. The DOL’s Employee Benefits Security Administration (EBSA) estimates that it will take plan administrators an average of approximately one hour to complete the notice.
The model notice comes after EBSA released its final rule this past January regarding changes to the VFCP. The changes were initially proposed in November 2022. The VFCP allows fiduciaries to send certain administrative errors to the DOL and receive a no-action letter. These include prohibited purchases and sales, improper loans, and late contributions.
In the text of the final rule, the DOL said the most significant changes to the VFCP involve the addition of two new self-correction features. The first is in section 7.1(b) for certain failures to timely transmit participant contributions (and participant loan repayments) to pension plans, and the second is in section 7.3(c) for certain participant loan failures self-corrected under IRS’s EPCRS, the department noted.
The 2025 VFCP update and amendments to PTE 2002-51 became effective March 17, 2025.
What the Notice Does
The model notice lets a plan participant know that the plan sponsor has applied to participate in the DOL’s VFCP regarding the plan, and explains that the program is voluntary and is intended for plan administrators to use in order to correct possible breaches of Title I of ERISA.
The notice briefly explains the VFC Program, and that it is accompanied by a “class exemption” from certain excise taxes imposed under the Internal Revenue Code on parties participating in prohibited transactions, but that applicable terms must be met for the applicant to qualify for the exemption.
It further notifies the recipient that the prohibited transaction rules are intended to prevent dealings with persons or entities that may be in a position to exercise improper influence over employee benefit plan assets.
The notice also outlines the possible error that initiated the application for the VFCP, and outlines the steps by which that mistake could be corrected.
The notice further instructs its recipients that they can provide comments to EBSA about the prohibited transaction that prompted the plan sponsor to make the application, as well as comment on the steps by which the prohibited transaction can be corrected. Notice recipients have 30 calendar days, beginning with the date the notice was sent, to send comments to EBSA.
Finding Out More
The DOL model participant notice is here.
A DOL Fact Sheet on the program changes can be found here.
Source(s):
Iekel, J. (2025, March 21). DOL Publishes New VFCP Model Participant Notice. Napa-Net.org. https://www.napa-net.org/news/2025/3/dol-publishes-new-vfcp-model-participant-notice/
Sullivan, J. (2025, January 14). DOL Releases Voluntary Fiduciary Correction Program Final Rule. Napa-Net.org. https://www.napa-net.org/news/2025/1/dol-releases-voluntary-fiduciary-correction-program-final-rule/