DOL Extending Comment Period for VFCP Update

The Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) is reopening the comment period for its proposed amendments to the Voluntary Fiduciary Correction Program (VFCP) and amendments to Prohibited Transaction Exemption 2002-51, as originally proposed in November 2022. In reopening the comment period that had originally closed January 20, 2023, EBSA is citing section 305 of the SECURE 2.0 Act of 2022 that provides for the expansion of the IRS’s Employee Plans Compliance Resolution System (EPCRS). For this purpose, section 305(b) covers eligible inadvertent failures as they relate to plan loan errors, including that such errors corrected through EPCRS’ self-correction (SCP) shall be treated as meeting the requirements of VFCP and that EBSA can impose reporting and procedural requirements. Therefore, EBSA is seeking comments on what changes may be needed to VFCP in light of SECURE 2.0 Sec. 305(b) specifically and Sec. 305 more generally.

The reopening of the proposed rule is scheduled to be published in the Federal Register on February 14, 2023, and comments can be made within 60 days of publication.