The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) is resoliciting comments on its Voluntary Fiduciary Correction Program (VFCP) for input on changes mandated by the SECURE 2.0 Act of 2022.
Also cited were comments to the proposed amendment to Prohibited Transaction Exemption 2002-51 (PTE 2002-51), which was published in the Federal Register on Nov. 21, 2022. EBSA published the modifications to the program and a proposed amendment to PTE 2002-51 to both simplify and expand the original VFCP, and solicited comments from interested persons by Jan. 20, 2023.
On Dec. 29, 2022, the Consolidated Appropriations Act of 2023, which includes a provision pertaining to the VFCP, was signed into law. The DOL says it is reopening the comment period to allow commenters to address any issues raised by the new statutory provision.
The program encourages plans to comply with ERISA and the Internal Revenue Code by self-correcting violations of the law. If plans voluntarily correct eligible transactions and meet the specified requirements, the program and exemption together allow the plans to avoid potential civil enforcement actions and penalties.
On Nov. 18, 2022, EBSA issued proposals and invited comments on the proposed program and exemption updates, including a self-correction component for employers who fail to send employee salary withholding contributions or participant loan repayments to retirement plans in a timely manner. The comment period for these proposals closed on Jan. 20, 2023 (for a summary of how those changes would affect voluntary plan corrections, see "How Proposed Changes Will Affect Voluntary Plan Corrections: ARA’s Wielobob").
Participant Loan Corrections Focus
After the proposals’ publication, the Consolidated Appropriations Act of 2023 was signed into law. The law includes a provision that requires the program to cover certain violations related to participant loans if self-corrected violations align with the IRS’ Employee Plans Compliance Resolution System (EPCRS). EBSA is reopening the comment period for 60 days to gather additional comments on any issues related to the amendment of the program to implement the act’s requirements.
“Reopening the comment period will allow the Employee Benefits Security Administration to obtain important public input on implementing the changes mandated by Congress in the SECURE 2.0 Act of 2022 that impact the department’s Voluntary Fiduciary Correction Program,” explained Assistant Secretary for Employee Benefits Security Lisa M. Gomez.
SECURE 2.0 Act of 2022 is, of course, the short title of Division T of the Consolidated Appropriations Act of 2023. It includes a number of provisions related to retirement and other types of plans.
Notice of comment period reopening will be published in the Federal Register on Feb. 14.
And yes, the American Retirement Association expects to comment.