DOL Spring 2010 Semi-Annual Regulatory Agenda: Voluntary Fiduciary Correction Program (VFCP)

The DOL has released the DOL Spring 2010 Semi-Annual Regulatory Agenda. One of the topics is the Voluntary Fiduciary Correction Program (VFCP):

Voluntary Fiduciary Correction Program (VFCP) (EBSA)

The VFCP enhances retirement security and protects workers by encouraging compliance with the Employee Retirement Income Security Act (ERISA) and restoring plan assets and the payment of additional benefits.

Here is a link to the fact sheet:

In 2006, the Department of Labor published in the Federal Register an Update of the Voluntary Fiduciary Correction Program (VFCP), which simplified and expanded the original VFCP published in 2002. The VFCP enhances retirement security and protects workers by encouraging compliance with the Employee Retirement Income Security Act (ERISA) and restoring plan assets and the payment of additional benefits, ultimately supporting the Secretary's good jobs for everyone policy.

Key Concern and Issues to be addressed

The 2006 Update of the VFCP includes 19 categories of plan transactions that may be corrected under the Program and an online calculator for determining amounts to be restored to plans. The updated VFCP serves to both encourage and facilitate the use of the Program as a means by which to correct covered fiduciary violations.

Background

The VFCP is designed to encourage employers to voluntarily comply with ERISA by self-correcting certain violations of the law. Many workers can benefit from the VFCP as a result of the increased retirement security associated with restoration of plan assets and payment of additional benefits. It also helps plan officials understand the law. The 2006 Update of the VFCP describes how to apply the 19 categories of transactions covered, acceptable methods for correcting violations, and examples of potential violations and corrective actions. The Department issued the Update in response to public and internal comments on the preliminary revision of the VFCP published in April 2005. The 2006 Update of the VFCP was effective May 19, 2006. The Department also provides applicants conditional relief from payment of excise taxes for certain VFCP transactions under a class exemption related to the VFCP. The amended class exemption was also effective on May 19, 2006.