Pension Agency Announces Voluntary Correction Program For Employee Benefit Plans

Archived News Release — Caution: Information may be out of date.

The U. S. Department of Labor’s Pension and Welfare Benefits Administration (PWBA) today published a notice adopting the Voluntary Fiduciary Correction Program (VFCP), which will help plan officials quickly and completely correct certain employee benefit plan violations.

PWBA has authority to bring civil enforcement actions and assess monetary penalties for violations of the Employee Retirement Income Security Act (ERISA). The VFC Program lays out procedures, the types of transactions covered by the program and acceptable corrective actions that do not require consultation or negotiation with the department.

Secretary of Labor Alexis M. Herman said, "This program gives employers and plan service providers an opportunity to dedicate their efforts to making plans and participants whole, rather than worrying about fines and penalties -- if they act to identify and correct problems before we find them. In the end, it benefits both workers and employers."

Any plan official, sponsoring employer or parties to affected transactions may apply to voluntarily correct violations covered by the program. In order to qualify for the program, applicants must fully undo any prohibited transactions, calculate any losses and restore any losses with interest or profits, and distribute any supplemental benefits owed to eligible participants and beneficiaries.

A notice must be given to participants advising them of corrected violations.

Transactions eligible for the program include:

• repayment of delinquent employee contributions
• certain prohibited loans
• loans with inadequate collateral or security
• certain improper sales or purchases, including prohibited transactions
• improper valuation of assets which affects benefits
• payment of excessive or duplicate plan expenses

The department may conduct investigations to determine compliance with the program and verify that corrective action has been taken. However, applicants who fail to fully correct fiduciary violations will be rejected and become subject to enforcement action and civil penalties. In addition, persons involved in pending investigations or criminal violations cannot take advantage of the program.

The VFC Program is scheduled to be published in the March 15 Federal Register and is available on PWBA’s website at www.dol.gov/dol/pwba. Questions about the application process should be directed to PWBA regional offices which also are listed in Appendix C of the interim rule.

Although the program is being put into effect 30 days after publication in the Federal Register, PWBA is seeking comments from the public on all aspects of the VFC Program. Comments should be addressed to the VFC Program, Office of Enforcement, Pension and Welfare Benefits Administration, U.S. Department of Labor, Room N5702, 200 Constitution Ave., N.W., Washington, D.C. 20210 or by internet to vfc-program@pwba.dol.gov.

U.S. Department of Labor news releases are accessible on the Internet. The information in this news release will be made available in alternate format upon request (large print, Braille, audio tape or disc) from the Central Office for Assistive Services and Technology. Please specify which news release when placing your request. Call 202.693.7773 or TTY 202.693.7775.

Archived News Release — Caution: Information may be out of date.