The Department of Labor has provided the public with more time to comment on amendments to the Voluntary Fiduciary Correction Program, it announced Monday.
The DOL’s Employee Benefits Security Administration reopened the public comment period—which had concluded on January 20—on amendments to the VFCP and proposed amendments to the associated class Prohibited Transaction Exemption 2002-51, the department stated. The new period runs for 60 days from notice being published in the Federal Register on Feb. 14, which means the extended period should conclude April 15.
“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,” stated Lisa Gomez, the assistant secretary for employee benefits security.
The DOL’s proposed rule, published in November 2022, would allow fiduciaries to self-correct for participant contributions that are not invested or participant loan repayments that are not repaid and then to notify the department.
Plan sponsors, in their capacity as fiduciaries, are urged to comply with the Employee Retirement Income Security Act and the Internal Revenue Code by self-correcting violations. If plans voluntarily correct eligible transactions and meet the specified requirements, the program and exemption allow plans to avoid potential civil enforcement actions and penalties.
The SECURE 2.0 Act of 2022—a package of a package of retirement reforms passed by Congress in December 2022—included provisions for retirement and other types of plans. One change was to allow plans to self-correct errors related to loan administration through the Self-Correction Program under the Employee Plans Compliance Resolution System, within the jurisdiction of the IRS. Matt Hawes, a partner in the Morgan Lewis law firm, has explained previously that the earlier IRS policy required a process called the Voluntary Correction Program, which allowed plan sponsors to pay a fee and request IRS approval to make a correction.
Because SECURE 2.0 was passed after the proposal’s initial publication, the DOL is seeking additional feedback, notes Grant Vaught, a spokesperson at the Department of Labor, by email.
“The law includes a provision that requires the voluntary fiduciary correction program to cover certain violations related to participant loans if self-corrected violations align with the IRS’ Employee Plans Compliance Resolution System,” he says. “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.”