4192 Federal Register / Vol. 90, No. 9 / Wednesday, January 15, 2025 / Rules and Regulations 

1Under Reorganization Plan No. 4 of 1978, 5 

U.S.C. App., the authority of the Secretary of 

Treasury to issue exemptions pursuant to Code 

section 4975 was transferred, with certain 

exceptions not relevant here, to the Secretary of 

Labor. 

2 67 FR 15062 (March 28, 2002), 70 FR 17516 

(April 6, 2005), 71 FR 20262 (April 19, 2006). 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

29 CFR Parts 2560 and 2570 

RIN 1210–AB64 

Voluntary Fiduciary Correction 

Program 

AGENCY: Employee Benefits Security 

Administration, Department of Labor. 

ACTION: Notification of adoption of 

Updated Voluntary Fiduciary Correction 

Program. 

SUMMARY: This document contains an 

amended and restated Voluntary 

Fiduciary Correction Program (VFC 

Program or Program) under title I of the 

Employee Retirement Income Security 

Act of 1974, as amended (ERISA). The 

VFC Program is designed to encourage 

correction of fiduciary breaches and 

compliance with the law by permitting 

persons to avoid potential Department 

of Labor civil enforcement actions and 

civil penalties if they voluntarily correct 

eligible transactions in a manner that 

meets the requirements of the Program. 

The amendments to the Program 

simplify and expand the VFC Program 

to make the Program easier to use and 

more useful for employers and others 

who wish to avail themselves of the 

relief provided. Specifically, the 

Program amendments add a selfcorrection feature for delinquent 

transmittal of participant contributions 

and loan repayments to a pension plan 

under certain circumstances; clarify 

some existing transactions eligible for 

correction under the Program; expand 

the scope of other transactions currently 

eligible for correction; and simplify 

certain administrative or procedural 

requirements for participation in and 

correction of transactions under the VFC 

Program. In addition, the amendments 

implement section 305(b)(2) and (3) of 

the SECURE 2.0 Act of 2022 (SECURE 

2.0 Act) by adding a self-correction 

feature for certain participant loan 

failures self-corrected under the Internal 

Revenue Service’s Employee Plans 

Compliance Resolution System (as 

described in Rev. Proc. 2021–30, or any 

successor guidance) (IRS’s EPCRS). 

DATES: The amendments to the VFC 

Program contained in this document are 

effective on March 17, 2025. 

FOR FURTHER INFORMATION CONTACT: 

Brian J. Buyniski or Yolanda 

Wartenberg, Office of Regulations and 

Interpretations, Employee Benefits 

Security Administration (EBSA), (202) 

693–8500, for questions regarding the 

VFC Program amendments in this 

document. Emily Harris, Office of 

Exemption Determinations, EBSA, (202) 

693–8540, for questions regarding the 

amended associated class exemption 

PTE 2002–51. James Butikofer, Office of 

Research and Analysis, EBSA, (202) 

693–8410, for questions regarding the 

regulatory impact analysis. (These are 

not toll-free numbers.) 

For general questions regarding the 

VFC Program: contact Dawn MiatechPlaska, Office of Enforcement, EBSA, 

(202) 693–8691. For questions regarding 

specific applications and selfcorrections under the VFC Program: 

contact the appropriate EBSA Regional 

Office listed in appendix C. (These are 

not toll-free numbers.) 

Customer Service Information: 

Individuals interested in obtaining 

information from the Department 

concerning ERISA and employee benefit 

plans may call the EBSA Toll-Free 

Hotline, at 1–866–444–EBSA (3272) or 

visit the Department’s website 

(www.dol.gov/ebsa). 

SUPPLEMENTARY INFORMATION: 

A. Summary Overview 

The Voluntary Fiduciary Correction 

Program (VFC Program or Program) 

gives plans and fiduciaries a ready 

means to correct violations of ERISA, 

without the transaction costs and 

burden associated with enforcement 

actions for violations of the fiduciary 

standards in title I of ERISA), 29 U.S.C. 

1132(a)(2) and 1132(a)(5). As an 

enforcement policy, the Program 

simultaneously promotes compliance 

with the law, correction of violations, 

and the efficient use of scarce 

enforcement resources. The Department 

also has the authority under section 

408(a) of ERISA (29 U.S.C. 1108) to 

issue exemptions from the prohibited 

transaction rules in sections 406 and 

407 of ERISA (29 U.S.C. 1106 and 1107) 

and in section 4975 of the Internal 

Revenue Code (Code).1 Accordingly, in 

tandem with this amendment to the 

Program and in this same issue of the 

Federal Register, the Department has 

also published associated amendments 

to Prohibited Transaction Exemption 

(PTE) 2002–51, which implements 

important components of the VFC 

Program. 

The EBSA adopted the VFC Program 

in 2002, and later revised it in 2005 and 

2006.2 EBSA designed the VFC Program 

to encourage employers and plan 

fiduciaries to voluntarily comply with 

ERISA and allow those potentially liable 

for certain specified fiduciary breaches 

under ERISA to voluntarily apply for 

relief from civil enforcement actions 

and certain civil penalties, provided 

they meet the Program’s criteria and 

follow the procedures outlined in the 

Program. 

Although the Department is not 

required to seek public comments on 

changes to an enforcement policy, in 

November 2022, EBSA published 

proposed revisions to the VFC Program 

with a request for public comments. The 

Department also proposed amendments 

to PTE 2002–51 for coordination. 

Additionally, because the VFC Program 

includes information collections that are 

subject to the Paperwork Reduction Act, 

the Department sought public comment 

in the November 2022 proposal on the 

revisions to the information collections 

included in the amendments to the VFC 

Program. The proposal discussed the 

revisions and incorporated them into a 

restatement of the VFC Program in its 

entirety for ease of reference. Comments 

received on the 2022 VFC Program 

proposed revisions and the proposed 

amendments to the related class 

exemption are posted on EBSA’s 

website. 

After careful consideration of the 

issues raised in the comment letters, 

EBSA decided to adopt final changes to 

the Program as discussed herein. In 

tandem with this publication of the 

2025 VFC Program, EBSA is publishing 

final amendments to PTE 2002–51 to 

conform with certain revisions in the 

2025 VFC Program. For a discussion of 

the amendments to the class exemption 

and the public comments to those 

changes, see amended PTE 2002–51, 

which is also published elsewhere in 

this issue of the Federal Register. 

With these amendments, EBSA 

intends to facilitate more efficient and 

less costly corrections of fiduciary 

breaches under the Program, encourage 

greater participation in the Program, and 

respond to requests from stakeholders 

for adjustments based on their 

experiences using the Program. In this 

regard, the amendments are designed to 

simplify the Program and make it easier 

to use by employers and others who 

wish to avail themselves of the relief 

provided. Notably, the new selfcorrection procedures will apply to the 

transaction most frequently corrected 

under the Program—the delinquent 

transmittal of participant contributions 


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Federal Register / Vol. 90, No. 9 / Wednesday, January 15, 2025 / Rules and Regulations 4193 

3EBSA acknowledges that it has experience with 

certain transactions fitting within one or more of 

the listed categories of transactions, even if not 

specifically named in the category, for example 

certain transactions involving contributions in kind 

under section 7.4(a) of the Program. EBSA 

encourages potential applicants to discuss 

eligibility and similar issues with the appropriate 

regional VFC Program coordinator. 

4Stakeholders interested in a discussion of the 

components of the VFC Program that are not being 

revised in this document should review the Federal 

Register notices announcing the original 2002 

Program and the 2005 and 2006 updates, as well as 

the 2022 proposed revisions to the Program. See 67 

FR 15062 (March 28, 2002), 70 FR 17516 (April 6, 

2005), 71 FR 20262 (April 19, 2006), and 87 FR 

71164 (Nov. 21, 2022). For PTE 2002–51, see 67 FR 

70623 (2002); 71 FR 20135 (2006), and 87 FR 70753 

(Nov. 21, 2022). Prior to adoption in March 2002, 

the VFC Program was made available on an interim 

basis during which the Department invited and 

considered public comments on the Program. See 

65 FR 14164 (March 15, 2000). 

5The term pension plans include both defined 

contribution plans and defined benefit plans. See 

ERISA section 3(34) and 3(35). 

6To reflect the inclusion of the SCC into the 

Program, section 6 has been renamed ‘‘VFC Program 

Application and Self-Correction Component 

Procedures’’ and the prior section 6 has been 

renamed and re-designated as section 6.1 ‘‘VFC 

Program Application Procedures.’’ 

and loan repayments to pension plans— 

as well as to certain participant loan 

failures self-corrected under IRS’s 

EPCRS. The amendments also clarify 

language and simplify certain 

administrative and procedural 

requirements for participation in and 

correction of transactions under the 

Program. This includes revisions to 

eligibility criteria that allow the 

submission of applications covering 

multiple plans by a single service 

provider under certain circumstances 

(i.e., bulk applicants), as well as 

additional flexibility in the corrections 

methods for several violations. The 

Department anticipates that many users 

of the Program, as amended, will find it 

improved and less resource intensive, 

without sacrificing protections of the 

affected plans. 

The following section of this 

document is an overview of the 2025 

VFC Program and the Department’s 

response to issues raised in the public 

comments. This document includes a 

restatement of the Program in its 

entirety to facilitate reference to and 

future use of the Program as amended. 

B. Overview of Changes in the 2025 

VFC Program 

The 2025 VFC Program retains the 

fundamentals of the 2006 VFC Program. 

The Program describes how to apply for 

relief, lists the specific transactions 

covered,3 and sets forth acceptable 

methods for correcting fiduciary 

breaches under the Program. It also 

provides examples of potential breaches 

and related permissible corrective 

actions. The Program defines the term 

‘‘Breach’’ to mean any transaction that 

is or may be a violation of the fiduciary 

responsibilities contained in part 4 of 

title I of ERISA. The Program also 

provides a model application form, a 

checklist, and an online calculator for 

determining correction amounts. The 

VFC Program will continue to be 

administered in EBSA Regional Offices. 

Eligible applicants that satisfy the terms 

and conditions of the VFC Program 

application process receive a ‘‘no 

action’’ letter from EBSA and are not 

subject to civil monetary penalties for 

the corrected transactions. Excise tax 

relief for six specific VFC Program 

transactions is conditionally available 

under the amended associated class 

exemption, PTE 2002–51.4

The most significant changes to the 

VFC Program involve the addition of 

two new self-correction features. The 

first is in section 7.1(b) for certain 

failures to timely transmit participant 

contributions (and participant loan 

repayments) to pension plans,5 and the 

second is in section 7.3(c) for certain 

participant loan failures self-corrected 

under IRS’s EPCRS. The other Program 

amendments in this document: (1) 

clarify existing transactions eligible for 

correction under the Program; (2) 

expand the scope of certain transactions 

currently eligible for correction; and (3) 

simplify certain administrative or 

procedural requirements for 

participation in the VFC Program and 

correction of transactions under the 

Program. A more detailed summary of 

the Program revisions is set forth below 

in this preamble. 

1. Self-Correction Component for 

Delinquent Participant Contributions to 

Pension Plans—Section 7.1(b) 

The 2025 VFC Program includes a 

new self-correction component (SCC) 

for failures to timely transmit 

participant contributions (and 

participant loan repayments) to pension 

plans in specified circumstances. The 

new SCC adds a more streamlined 

correction mechanism than is currently 

available under section 7.1(a) for 

instances in which employers have 

retained participant contributions or 

loan repayments beyond the time 

contemplated by the Department’s 

regulations at 29 CFR 2510.3–102. 

This transaction, referred to as 

‘‘delinquent participant contributions,’’ 

is the type of transaction most 

frequently corrected under the Program. 

The Department received input from 

stakeholders who said the time and 

expense required to file a VFC Program 

application with the Department is a 

disincentive to use the Program to 

correct delinquent participant 

contribution transactions, especially 

when they involve small dollar 

amounts. Many of the comment letters 

submitted on the 2022 VFC Program 

proposed revisions expressed support 

for the self-correction feature, pointing 

out that it will promote voluntary, 

timely, and efficient correction of errors; 

increase compliance; eliminate 

unnecessary administrative 

requirements and costs; free up EBSA 

resources; and help ensure participants’ 

retirement savings are secure. One 

commenter expressed concern, 

however, that the elimination of notices 

or official approvals in the final Program 

could open the Program to abuse and 

create an impression that no one is 

monitoring the system. 

After carefully considering the public 

comments, the Department agrees that a 

streamlined self-correction feature for 

delinquent participant contributions to 

pension plans with appropriately 

designed safeguards will encourage 

more voluntary corrections by 

employers and other persons who are in 

a position to correct a Breach (Plan 

Officials). It will also enable EBSA to 

better allocate resources currently 

dedicated to processing VFC Program 

applications for these transactions. 

Accordingly, the 2025 VFC Program 

adds the SCC as the correction method 

for the list of eligible transactions in 

section 7.1(b) entitled ‘‘Delinquent 

Participant Contributions and Loan 

Repayments to Pension Plans under the 

Self-Correction Component.’’ 6

Under the final amendments, relief 

under the SCC for delinquent 

participant contributions and 

delinquent plan loan repayments is 

available in connection with any 

pension plan regardless of the size of 

the plan’s participant population or 

amount of plan assets, so long as the 

applicant is eligible to use the Program 

and meets the conditions discussed 

below. While self-correctors that satisfy 

the terms and conditions of the VFC 

Program do not receive a no-action letter 

from EBSA, the SCC provides that 

compliance with the Program’s terms 

and conditions will avoid the 

imposition of civil monetary penalties 

or an EBSA civil enforcement action 

against the SCC participant. As with any 

application under the Program, 

however, and in accordance with 

section 2(b) ‘‘Verification,’’ EBSA 

reserves the right to conduct an 

investigation with respect to the 

transaction corrected through the SCC, 


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7Section 5(b)(6) defines ‘‘Lost Earnings’’ as an 

approximate amount that would have been earned 

by the plan on the Principal Amount, but for the 

Breach, and sets forth methodology for calculating 

Lost Earnings for purposes of the SCC. 

8The 2022 VFC Program proposed revisions 

estimated that the SCC would streamline the 

process for 74% of small and large VFC Program 

applicants involving Lost Earnings less than or 

equal to $1,000. 

9 87 FR 71164, 71181 (November 21, 2022). 

10For a discussion on whether each pay period 

can be viewed as a separate transaction, refer to the 

associated class exemption, PTE 2002–51 and the 

Voluntary Fiduciary Correction Program Class 

Exemption FAQs which can be found in EBSA’s 

website at https://www.dol.gov/sites/dolgov/files/ 

ebsa/about-ebsa/our-activities/resource-center/faqs/ 

vfcp-class-exemption-faqs.pdf. 

to determine the truthfulness and 

completeness of the factual statements 

set forth in the SCC notice and to 

confirm the corrective action was in fact 

taken. 

(a) Self-Correction Component $1,000 

Lost Earnings Amount Limit—Section 

7(b)(1)(ii)(A) 

Eligibility to use the SCC in section 

7.1(b) is conditioned on the amount of 

Lost Earnings 7 on the delinquent 

participant contributions or loan 

repayments being $1,000 or less 

(excluding any excise tax amounts paid 

to the plan under the related class 

exemption PTE 2002–51). 

Several commenters recommended 

eliminating, increasing, or changing the 

Lost Earnings $1,000 cap. Some of these 

commenters expressed the view that it 

would be desirable from a standpoint of 

cost and efficiency to allow broader 

availability, while other commenters 

asserted the cap would restrict large and 

mid-size plan sponsors from 

participating and could result in others 

bifurcating the correction to skirt the 

limit. Several commenters observed that 

using the cap on Lost Earnings as 

determined by the online calculator, 

which utilizes the Code section 

6621(a)(2) underpayment rates, will 

result in fluctuations leading to 

inconsistency and confusion with 

respect to SCC eligibility. 

A variety of options were 

recommended by commenters, 

including increasing the Lost Earnings 

to $2,500 or $10,000; addition of a costof-living adjustment; adopting a cap that 

varies based on the amount of plan 

assets or number of participants; and 

eliminating the cap altogether. 

Commenters further recommended the 

Program allow the use of plan’s 

forfeiture accounts to pay for Lost 

Earnings, arguing that such use would 

be consistent with the IRS’s EPCRS, 

which allows a plan sponsor to use plan 

forfeitures to fund corrective allocations 

in certain circumstances. Another 

commenter suggested that the Program 

include a de minimis provision under 

which Lost Earnings would not have to 

be calculated and included in corrective 

payments. Alternatively, the commenter 

suggested that the Department should 

allow de minimis Lost Earnings 

amounts to be paid from the plan’s 

forfeiture account. 

After consideration of the comments, 

the Department has determined to 

finalize the $1,000 Lost Earnings cap as 

proposed. The Department believes that 

a substantial majority of delinquencies 

will be eligible for correction under the 

SCC even with the $1,000 Lost Earnings 

cap.8 However, as noted in the 2022 

VFC Program proposed revisions, the 

$1,000 Lost Earnings cap along with the 

180-day remittance deadline (discussed 

below) are intended to exclude 

delinquencies from the SCC when the 

amount or length of delinquency suggest 

a need for EBSA to actively evaluate the 

circumstances surrounding the breach 

and the timing of the correction under 

the VFC Program application process. 

The Department believes it is 

appropriate to retain these protective 

parameters as it proceeds with a new 

element of the VFC Program. 

With respect to the suggestion that the 

Lost Earnings calculation be based on 

the amount of plan assets or number of 

participants, EBSA believes that the 

Lost Earnings cap should continue to be 

a fixed figure. The VFC Program, and 

especially the SCC, is designed to 

provide simplicity and uniformity with 

an approach that eliminates 

complicated requirements for 

computation. A variable cap based on 

the total amount of plan assets or the 

total number of participants, by 

contrast, would complicate eligibility 

determinations and the Department’s 

oversight of those determinations, 

undermining the goal of simplicity. 

Regarding the use of forfeitures to pay 

for Lost Earnings, from its inception in 

2000, the Program has required that the 

cost of correction not be paid from plan 

assets. Lost Earnings is part of the 

correction amount which is described in 

section 5(b) as a combination of the 

Principal Amount involved in the 

transaction, Lost Earnings, and any 

interest on the Lost Earnings. It was 

further clarified in section 5(c) of the 

2022 VFC Program proposed revisions 

that the cost of correction cannot be 

paid from plan assets, including charges 

against participant accounts or plan 

forfeitures accounts.9 This is still the 

right approach. It would defeat ERISA’s 

remedial purposes, and undermine 

enforcement of the law’s protections, to 

permit employers and fiduciaries to 

shift the cost of the correction to the 

plan itself, thereby causing new injury 

to the plan. Thus, this requirement and 

the clarification regarding forfeitures 

will continue to be part of the VFC 

Program. 

Several commenters seeking 

clarification of the timeframe to 

calculate the Lost Earnings cap asked 

whether each pay period is viewed as a 

separate transaction. Generally, the 

Department has considered each pay 

period as a separate transaction; 

however, the Department has permitted 

more than one pay period to be treated 

as one transaction under the VFC 

Program if the pay periods are close 

together in time and the delinquencies 

are related to the same cause.10

(b) Self-Correction Component 180-Day 

Contribution Remittance Deadline— 

Section 7(b)(1)(ii)(B) 

To be eligible for the SCC in section 

7.1(b), the delinquent participant 

contributions or loan repayments must 

have been remitted to the plan within 

180 calendar days from the date of 

withholding from participants’ 

paychecks or receipt by the employer. 

Several commenters argued that a 

180-calendar day contribution 

remittance deadline was too restrictive 

and suggested extending it to either 120 

days following the end of the plan year 

or until the due date of the Annual 

Return/Report of Employee Benefit 

Plans (Form 5500 or Form 5500–SF, as 

applicable). As noted above, the 

preamble to the 2022 VFC Program 

proposed revisions states that the 180- 

day remittance deadline is designed to 

exclude delinquencies that suggest the 

need for EBSA to actively evaluate the 

circumstances surrounding the breach 

and the timing of the correction. The 

Department continues to believe that a 

failure to identify a delinquency and 

remit contributions or loan payments 

due to the plan within 180 days 

indicates a potentially serious problem 

with the plan’s processes and 

procedures for handling participant 

contributions and loan payments. It 

would not be consistent with prudent 

fiduciary administration of a plan to 

wait until the end of the plan year, the 

completion of the annual audit of the 

plan for annual reporting purposes, or 

the due date of the Form 5500 or Form 

5500–SF to check for timely 

transmission of participant 

contributions and loan repayments. The 

Department also does not believe it 

would be appropriate to structure the 

VFC Program in a way that suggests that 

it is consistent with ERISA’s fiduciary 


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11Unlike the IRS program, the SCC includes PTE 

2002–51, which provides an exemption from the 

prohibited transaction excise tax for certain 

transactions identified in the VFC Program. 

duties to wait until the end of the year, 

the annual audit, or the filing of the 

plan’s annual report to check for 

delinquent transmittal of contributions 

and loan repayments. Accordingly, 

EBSA has decided to retain this 

requirement, which has also been part 

of the class exemption since its 

inception in 2002, and which is 

intended to provide protection to 

participants and beneficiaries especially 

in situations outside of the full VFC 

Program application process. 

(c) Requirements for the Self-Correction 

Component—Sections 5(b)(3)(ii), 

7.1(b)(2)(i) 

As with the current VFC Program 

application-based procedure for 

delinquent participant contribution 

transactions in section 7.1(a), correction 

amounts under the SCC consist of the 

(1) Principal Amount and (2) Lost 

Earnings, with the Principal Amount 

being the amount of participant 

contributions or loan repayments that 

would have been contributed to the plan 

if the employer had not retained such 

amounts and the Lost Earnings being the 

amount of earnings that would have 

been earned on the Principal Amount 

but for the failure to timely remit such 

amounts to the plan. 

The SCC requires that Lost Earnings 

be paid from the ‘‘Date of Withholding 

or Receipt,’’ and mandates the use of the 

online calculator to determine the 

amount of the loss payable to the plan. 

The term ‘‘Date of Withholding or 

Receipt’’ means the date the amount 

would otherwise have been payable to 

the participant in cash in the case of 

amounts withheld by an employer from 

a participant’s wages, or the date on 

which the participant contribution or 

loan payment is received by the 

employer in the case of amounts that a 

participant or beneficiary pays to an 

employer. The calculation of Lost 

Earnings from the Date of Withholding 

or Receipt is a special rule for purposes 

of the SCC and differs from the 

calculation of Lost Earnings under the 

full VFC Program application process, 

which begins on the earliest date on 

which the participant contributions or 

loan repayments could reasonably have 

been segregated from the employer’s 

general assets (i.e., the date on which 

the contributions become plan assets 

under the Department’s regulation at 29 

CFR 2510.3–102). Use of the earlier date 

and the use of the online calculator are 

important elements of the SCC that are 

intended to help ensure full correction 

without the need for the protections 

afforded by the Program’s otherwise 

applicable application and Department 

approval process. These elements also 

will provide self-correctors with 

certainty that the calculation of Lost 

Earnings will meet the requirements of 

the SCC. 

(d) Self-Correction Component Notice 

Requirement—Section 7.1(b)(2)(iii) 

Section 7.1(b)(2)(iii) of the SCC sets 

forth a requirement for an electronically 

filed notice (SCC notice) in place of the 

generally applicable paper application 

requirements in section 7.1(a)(3) of the 

Program. The required data elements in 

the SCC notice include: the name and 

an email address for the self-corrector; 

the plan name; the plan sponsor’s ninedigit employer identification number 

(EIN) and the plan’s three-digit number 

(PN); the Principal Amount; the amount 

of Lost Earnings and the date paid to the 

plan; the Loss Date (for purposes of the 

SCC, the Date(s) of Withholding or 

Receipt); and the number of participants 

affected by the correction. The SCC 

notice must be submitted electronically 

to EBSA using a new online VFC 

Program web tool located on EBSA’s 

website. Self-correctors using the web 

tool will receive an automatic EBSA 

email acknowledging the SCC notice 

submission. 

Several commenters asserted that the 

SCC notice requirement would 

discourage plan sponsors from using the 

SCC, although one commenter 

acknowledged it would not appear to 

impose a significant burden. 

Commenters also stated that the SCC 

notice was unnecessary because 

delinquent contributions and 

delinquent loan repayments are already 

reported on the Form 5500. Another 

commenter observed that self-correction 

under the IRS’s EPCRS does not require 

notice to the Internal Revenue Service 

(IRS), while another commenter 

proposed a minimum dollar threshold 

before there would be a requirement for 

the completion of the SCC notice. 

However, as discussed above, another 

commenter expressed concern that any 

elimination of notices or official 

approvals can leave open doors for 

abuse and create the impression that no 

one is monitoring the system. 

As noted in the preamble to the 2022 

VFC Program proposed revisions, EBSA 

has been reluctant to adopt overbroad 

self-correction features because of the 

danger that it would have insufficient 

information regarding the breach and 

correction for which it is providing noaction relief. The decision to adopt the 

SCC is premised, however, on a 

conclusion that a well-designed selfcorrection feature can result in the 

Department receiving sufficient timely 

information to meet oversight objectives 

and ensuring appropriate corrections 

while also encouraging more Plan 

Officials to utilize the Program. In the 

Department’s view, a well-designed 

program requires parties to file the basic 

data that is necessary for the 

Department to ensure adequate 

corrections, and appropriate oversight 

and accountability for fiduciary 

violations. Further, although EBSA 

supports appropriate harmonization of 

VFC Program provisions with the IRS’s 

EPCRS when dealing with corrections of 

the same transaction, the Department 

does not believe that the SCC needs to 

match the requirements under the SelfCorrection Program (SCP) of the IRS’s 

EPCRS in every respect.11 In addition, 

EBSA does not believe reporting 

delinquencies and corrections on the 

Form 5500 or Form 5500–SF is an 

adequate alternative to the SCC notice. 

The SCC notice is intended to provide 

a relatively contemporaneous report of 

the delinquency being corrected. 

Reporting delinquencies and corrections 

on the Form 5500 or Form 5500–SF may 

not happen until many months after the 

delinquency has been corrected. For 

example, a delinquency that occurs in 

January of a calendar year plan would 

not be reported until the end of July or, 

with a generally available extension, 

until the middle of October of the 

following year. EBSA, accordingly, has 

decided to retain the SCC notice and 

electronic filing requirements as 

proposed. 

(e) Self-Correction Component 

‘‘Retention Record Checklist’’—Penalty 

of Perjury Statement—Sections 6.2(d), 

6.2(e) and 7.1(b) 

Self-correctors under the SCC in 

section 7.1(b) must prepare or collect 

the documents listed in the SCC 

Retention Record Checklist, printed 

below in appendix F, and provide the 

completed checklist and required 

documentation to the plan administrator 

as required under sections 6.2(d) and 

7.1(b)(3). Also, to participate in the SCC, 

a plan fiduciary with knowledge of the 

transaction that is being self-corrected 

and each Plan Official seeking relief 

under the program must sign a penalty 

of perjury statement as follows: ‘‘Under 

penalties of perjury I certify that I am 

not Under Investigation (as defined in 

section 3(b)(3) of the VFC Program) and 

that I have reviewed the SCC notice 

acknowledgment and summary, the 

checklist, and all the required 

documentation, and to the best of my 

knowledge and belief the contents are 


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4196 Federal Register / Vol. 90, No. 9 / Wednesday, January 15, 2025 / Rules and Regulations 

12As discussed below, the Department made a 

change in this 2025 VFC Program to permit an 

employer in a multiemployer plan or multiple 

employer plan who wishes to correct on its own 

behalf to sign the application or SCC penalty of 

perjury statement and, regardless of the employer’s 

status as a plan fiduciary, the penalty of perjury 

statement need not be signed by another plan 

fiduciary. See sections 6.1 and 6.2. 

13 67 FR 15062, 15068, (March 28, 2002). 

14 71 FR 20262, 20265 (April 19, 2006). 

15The proposal noted that the class exemption 

PTE 2002–51 is generally unavailable to VFC 

Program applicants that have, within the previous 

there years, taken advantage of the relief provided 

by the VFC Program and the exemption for a similar 

type of transaction. Comments were solicited on 

whether to eliminate the three-year use limitation 

in the exemption PTE 2002–51. A discussion of that 

issue and the Department’s conclusion can be found 

in the final amendment to PTE 2002–51 which 

appears in this issue of the Federal Register. 16 71 FR 20262, 20266 (2006). 

true, correct, and complete.’’ The 

penalty of perjury statement also 

appears in Appendix F.12

One commenter opposed the penalty 

of perjury requirement on the basis that 

it may have a chilling effect on 

utilization of the SCC and may increase 

litigation risk against Plan Officials. 

However, since its inception in 2002, 

the VFC Program has required a penalty 

of perjury statement as a necessary 

safeguard.13 As noted in the 2006 

Program, EBSA believes that an 

important result under the Program is a 

level of certainty that those using the 

Program have complied with the terms 

of the Program and have revealed the 

details of the transaction and the 

correction.14 The penalty of perjury 

statement is part of what provides that 

level of certainty. Accordingly, the final 

SCC in section 7.1(b) retains the penalty 

of perjury statement as a fundamental 

part of the Program. 

(f) Self-Correction Component 

Protections and Frequency of Use 

In the preamble to the 2022 VFC 

Program proposed revisions, the 

Department stated that it had 

considered but did not include a limit 

on the frequency with which a selfcorrector may use the SCC.15 The 

Department explained that it intended 

instead to monitor participation for 

frequent use of the SCC and that it may 

communicate with repeat users or open 

investigations to identify and correct 

systemic issues leading to repeated 

failures to transmit participant 

contributions in a timely fashion. The 

Department requested comments on 

whether the SCC should incorporate 

other protections for pension plans that 

are classified as small based on their 

participant population. For example, 

EBSA asked whether the SCC should 

limit small plan participation to only 

those small plans whose plan sponsors 

comply with the safe harbor standard in 

29 CFR 2510.3–102(a)(2) for the timely 

handling of participant contributions. 

The Department noted that compliance 

could require, for example, either an 

existing practice or an agreement to put 

in place a customary practice of 

depositing participant contributions and 

loan payments with the plan not later 

than the 7th business day following the 

day on which such amount would 

otherwise have been payable to the 

participant in cash in the case of 

amounts withheld by an employer from 

a participant’s wages, or the 7th 

business day following the day on 

which the participant contribution or 

loan payment is received by the 

employer in the case of amounts that a 

participant or beneficiary pays to an 

employer. 

Commenters generally supported the 

decision not to impose a limit on the 

frequency of use of the SCC. One 

commenter believed that, given the Lost 

Earnings cap, repeat use of the SCC is 

unlikely to present a risk to participants. 

Another commenter argued that plan 

sponsors will be disincentivized from 

using the SCC if their frequency of use 

is monitored by EBSA and asked for 

guidance as to the level of usage that is 

likely to generate follow-up inquiries 

from EBSA. Commenters also asked that 

no additional requirements be imposed 

on self-corrections by small plans. They 

argued additional requirements were 

unnecessary because the Department 

retains the right to investigate a plan 

fiduciary if it fails to meet the SCC 

requirements and additional 

requirements could discourage 

participation in the SCC. One 

commenter argued that in its experience 

most small employers followed the 7- 

business day safe harbor, but a more 

restrictive standard in the SCC would 

fail to acknowledge that there are 

occasions when a particular deposit 

cannot be reasonably segregated from 

the employer’s general assets within the 

7-business day period. The Department 

has decided not to adopt additional 

requirements for small plans at this 

time. As discussed in the preamble to 

the 2022 VFC Program proposed 

revisions, EBSA will monitor the use of 

the SCC and evaluate the potential merit 

of added requirements based on that 

data. 

With respect to the request for 

guidance on the level of repeat usage of 

the SCC that might trigger 

communications from the Department 

or initiation of an investigation, the 

Department does not believe a general 

standard would be appropriate for 

determining whether repeated use of the 

SCC will generate an inquiry or 

investigation. Rather, the Department’s 

actions with respect to any particular 

repeat user will depend on the facts and 

circumstances of the individual 

corrections. 

(g) Self-Correction Component: 

Miscellaneous 

The VFC Program does not relieve 

plans from reporting delinquent 

participant contributions on the plan’s 

Form 5500 or Form 5500–SF, as 

applicable. That remains the case under 

these amendments to the Program for 

violations, regardless of whether 

corrected under the SCC or the 

application-based component of the 

VFC Program. 

A commenter urged the Department to 

provide guidance on whether and how 

plan administrators should report use of 

the SCC on the Form 5500 (Line 4a of 

the Schedule H or Schedule I for small 

plans; line 9(a) of the Schedule DCG) or 

Form 5500–SF (Line 10a). The 

instructions for the Form 5500 and the 

Form 5500–SF already specifically 

address reporting of delinquent 

contributions. EBSA directs filers to the 

instructions for the Form 5500 to 

determine their reporting obligation 

regarding delinquent participant 

contributions. The information 

submitted on the SCC notice enables the 

Department to cross-reference SCC 

correctors to the Form 5500/5500–SF 

data. The Department has a project on 

its regulatory agenda that involves an 

evaluation of general improvements to 

the annual reporting forms and 

instructions. The Department is open to 

input on that project from stakeholders 

related to whether the Department 

should propose adding questions to the 

Form 5500 and Form 5500–SF that 

specifically relate to use of the SCC. 

In the 2006 VFC Program, the 

Department rejected a recommendation 

that EBSA implement a de minimis rule 

under the VFC Program under which 

applicants would not be required to 

correct a previously filed Form 5500 in 

circumstances where the breach 

involved a defined de minimis 

threshold amount of the plan’s assets.16

EBSA continues to believe that such an 

exception from the requirement to file a 

complete and accurate annual report is 

not appropriate. Rather, when a 

prohibited transaction is not reported or 

is reported incorrectly on the plan’s 

Form 5500 or Form 5500–SF annual 

report, the Form 5500 or Form 5500–SF 

filing must be amended so the plan’s 

annual report correctly reflects the 

fiduciary breach and prohibited 

transaction. 


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Federal Register / Vol. 90, No. 9 / Wednesday, January 15, 2025 / Rules and Regulations 4197 

Another commenter recommended 

that the Department create an online 

excise tax calculator in coordination 

with the Department of the Treasury. A 

requirement for the use of the SCC 

under section 7.1(b)(2)(i) is that the Lost 

Earnings on the delinquent remittance 

of participant contributions and 

participant loan repayments be 

calculated using the online calculator. 

This requirement was supported by 

commenters as a straightforward 

method to determine the Lost Earnings 

amount. The Department will consider 

the recommended addition and consult 

with the Department of the Treasury, 

but believes that step is beyond the 

scope of the current amendments and is 

not prepared to adopt such an 

expansion of the online calculator 

concurrent with this release. 

2. Self-Correction Component for 

Participant Loan Transactions Corrected 

Pursuant to IRS’s EPCRS—Section 7.3 

The current VFC Program covers 

certain participant loans that fail to 

qualify for ERISA’s statutory exemption 

for plan loan programs in ERISA section 

408(b)(1). Specifically, these covered 

loan transactions are loans in which the 

terms of the loan did not comply with 

plan provisions that incorporated 

requirements of section 72(p) of the 

Code concerning amount, duration, or 

level amortization, or which defaulted 

due to a failure to withhold loan 

repayments from the participant’s 

wages. The correction under the 2006 

VFC Program for these transactions 

requires that the Plan Official 

voluntarily correct the loan with IRS 

approval under the Voluntary 

Correction Program (VCP) of the IRS’s 

EPCRS and provide to the Department 

information regarding the correction. 

In July 2021, IRS updated EPCRS to 

permit use of SCP for correction of 

certain participant loan failures. In 

December 2022, the SECURE 2.0 Act 

was enacted. Section 305(b)(1) of the 

SECURE 2.0 Act provides that an 

‘‘eligible inadvertent failure’’ related to 

a loan from a plan to a participant may 

be self-corrected according to the rules 

of section 6.07 of Revenue Procedure 

2021–30 or any successor guidance. 

Section 305(b)(2) of the SECURE 2.0 

Act requires the Department to treat 

eligible inadvertent failures related to 

participant loans that are self-corrected 

under the IRS’s EPCRS as described 

above as meeting the requirements of 

the VFC Program ‘‘if, with respect to the 

violation of the fiduciary standards of 

the Employee Retirement Income 

Security Act of 1974, there is a similar 

loan error eligible for correction under 

the IRS’s EPCRS and the loan error is 

corrected in such manner.’’ Section 

305(b)(3) of the SECURE 2.0 Act permits 

the Department to impose reporting or 

other procedural requirements with 

respect to parties that intend to rely on 

the VFC Program for correction of these 

eligible inadvertent failures. 

The 2022 VFC Program proposed 

revisions were published for public 

comment in November 2022 before the 

SECURE 2.0 Act was enacted, with a 

comment period closing date of January 

20, 2023. Some commenters addressed 

SECURE 2.0 Act section 305 during that 

comment period. However, because the 

amendments were published for public 

comment before the SECURE 2.0 Act 

was enacted, the Department reopened 

the comment period from February 14 to 

April 17, 2023, to specifically solicit 

comments on the SECURE 2.0 Act 

section 305 directive. In the notice 

reopening the comment period, the 

Department asked specific questions 

about section 305 of the SECURE 2.0 

Act, including (i) whether VFC Program 

section 7.3 should be amended to 

include a paragraph treating participant 

loan transactions self-corrected under 

the IRS’s EPCRS as meeting the 

requirements of the VFC Program, (ii) 

whether the VFC Program should 

impose additional reporting or other 

procedural requirements for these 

specific corrections, and (iii) whether 

changes were needed to PTE 2002–51. 

Several commenters expressed 

general support for the implementation 

of the changes required by the SECURE 

2.0 Act section 305, including support 

for adding a self-correction component 

to the VFC Program for participant loans 

self-corrected in accordance with the 

SCP of the IRS’s EPCRS. The 

commenters urged the Department to 

remove requirements in section 7.3 of 

the VFC Program that correctors must 

use VCP (under the IRS’s EPCRS) and 

that they must provide the Department 

with proof of payment and an IRS 

compliance statement. A commenter 

further recommended amending section 

2 of the VFC Program to provide that 

EBSA will not initiate a civil 

investigation or assess civil penalties for 

participant loan transactions corrected 

under the SCP of the IRS’s EPCRS. 

Several commenters stated that the 

Department should not impose any 

requirements on parties who self-correct 

plan loans under the VFC Program 

beyond what is required by the SCP of 

the IRS’s EPCRS. The commenters noted 

that the SCP of the IRS’s EPCRS does 

not impose notice or reporting 

requirements for employers that selfcorrect. One commenter stated that 

consistency between the IRS’s EPCRS 

and the Department’s VFC Program 

would simplify corrections and reduce 

burden. A different commenter stated 

that reporting to EBSA or other 

procedural requirements are 

unnecessary because a plan loan that is 

self-corrected under the SCP of the IRS’s 

EPCRS puts the affected participants in 

the position they would have been if no 

failure occurred. One commenter 

recommended that the Department also 

include other ‘‘eligible inadvertent 

failures’’ (i.e., eligible inadvertent 

failures other than those relating to 

loans to participants) in a VFC Program 

self-correction component as soon as 

practicable after the IRS provides 

guidance on the meaning of ‘‘eligible 

inadvertent failures’’ and how such 

failures can be self-corrected under 

EPCRS. 

After evaluating the comments, and 

pursuant to section 305 of the SECURE 

2.0 Act, the Department is modifying 

section 7.3 of the VFC Program to accept 

EPCRS self-corrections of eligible 

inadvertent failures of participant loan 

transactions. Specifically, the 2025 VFC 

Program adds a new self-correction 

component in section 7.3(c) entitled 

‘‘Eligible Inadvertent Participant Loan 

Failures Corrected under the SelfCorrection Component.’’ 

The description of the transaction set 

forth in section 7.3(c)(1) states, ‘‘A plan 

extended a loan to a plan participant 

who is a party in interest with respect 

to the plan based solely on their status 

as an employee of any employer whose 

employees are covered by the plan, as 

defined in section 3(14)(H) of ERISA. 

There is an Eligible Inadvertent 

Participant Loan Failure that involves a 

Breach as defined in section 3(b)(1) [of 

the VFC Program].’’ Section 7.3(c) 

further provides that an Eligible 

Inadvertent Participant Loan Failure is a 

participant loan failure that occurs 

despite the existence of practices and 

procedures that satisfy the standards set 

forth in, and is eligible for correction 

under, the IRS’s EPCRS, and does not 

include any participant loan failure that 

is egregious, relates to the diversion or 

misuse of plan assets, or is directly or 

indirectly related to an abusive tax 

avoidance transaction. In addition, in 

connection with the new provision in 

section 7.3(c), a new exception is added 

to section 4 titled ‘‘Exception for 

Eligible Inadvertent Participant Loan 

Failures’’ to clarify that a self-corrector 

is eligible to correct an Eligible 

Inadvertent Participant Loan Failure 

under section 7.3(c) even if the plan or 

the self-corrector is ‘‘Under 

Investigation,’’ within the meaning of 

the VFC Program so long as the selfcorrector is eligible to correct the 


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4198 Federal Register / Vol. 90, No. 9 / Wednesday, January 15, 2025 / Rules and Regulations 

17Under Q&A–4 of Notice 2023–43, once a plan 

or plan sponsor comes under examination (as 

defined in section 5.08 of Rev. Proc. 2021–30), an 

Eligible Inadvertent Participant Loan Failure is no 

longer eligible for self-correction under the IRS’s 

EPCRS unless the plan sponsor has, before the plan 

or plan sponsor comes under examination, 

demonstrated a specific commitment to implement 

a self-correction. However, under Q&A–5 of Notice 

2023–43, a plan sponsor may self-correct an Eligible 

Inadvertent Participant Loan Failure that is 

insignificant, determined in accordance with the 

factors set forth in section 8.02 of Rev. Proc. 2021– 

30, even if the plan or plan sponsor is under 

examination, and even if the failure is discovered 

on examination. 

18Notice 2023–43, Guidance on Section 305 of 

the SECURE 2.0 Act of 2022 with Respect to 

Expansion of the Employee Plans Compliance 

Resolution System, available at https://www.irs.gov/ 

pub/irs-drop/n-23-43.pdf. 

19 Id. at Q&A 1. 

20See section 6.07(4) of Revenue Procedure 

2021–30 (relating to correction of failure to obtain 

spousal consent for plan loan). 

21Notice 2023–43, at Q&A–11. 

22 67 FR 15062, 15063 (2002). 

23See 29 CFR 2510.3–102(a)(1). 

participant loan failure under the IRS’s 

EPCRS.17

The new SCC for participant loan 

failures in section 7.3(c) accordingly 

allows self-correction of transactions 

currently described in section 7.3(a) and 

(b) of the VFC Program—i.e., loans the 

terms of which did not comply with 

plan provisions that incorporated 

requirements of section 72(p) of the 

Code concerning amount, duration, or 

level amortization, or loans that 

defaulted due to a failure to withhold 

loan repayments from the participant’s 

wages—if such transactions are eligible 

for, and have been self-corrected under, 

the IRS’s EPCRS. The new SCC in 

section 7.3(c) also extends to the failure 

to obtain spousal consent for a plan loan 

and to allowing a loan when the loan 

exceeds the number permitted under the 

terms of the plan, also provided that the 

transactions are eligible for, and have 

been self-corrected under, the IRS’s 

EPCRS. 

IRS Notice 2023–43 (IRS Notice) 

provides interim guidance under section 

305 of the SECURE 2.0 Act with respect 

to the expansion of EPCRS, including 

with respect to the expansion of selfcorrection for eligible inadvertent 

failures relating to loans from plans to 

participants under section 305(b)(1).18

Among other things, the IRS Notice 

provides that plan sponsors may selfcorrect any eligible inadvertent failure 

relating to a loan from a plan to a 

participant that is corrected in 

accordance with section 6.07 of EPCRS, 

before EPCRS is formally updated 

pursuant to section 305(g) of the 

SECURE 2.0 Act, if certain conditions 

are satisfied.19 The IRS Notice also 

provides that plan sponsors may rely on 

the notice beginning on the date it was 

issued, May 25, 2023, and ending on the 

date EPCRS is updated pursuant to 

section 305(g) of the SECURE 2.0 Act. 

Likewise, with respect to the new SCC 

in section 7.3(c), the Department will 

accept self-correction in accordance 

with section 6.07 of the IRS’s EPCRS 

before EPCRS is formally updated. Once 

the IRS’s EPCRS is formally updated, 

the Department will accept selfcorrection in accordance with the 

updated EPCRS. In this regard, with 

respect to a failure to obtain spousal 

consent for a plan loan, the 

Department’s SCC will initially accept 

only a correction that involves obtaining 

spousal consent, unless and until 

additional correction methods are 

identified in an updated IRS’s EPCRS.20

The Department intends to monitor use 

of the SCC as well as any additional 

changes to the IRS’s EPCRS to 

determine whether additional guidance 

appears necessary on the scope of the 

SCC in section 7.3(c) or on any 

correction methods. 

The Department does not agree with 

the commenters who suggested that the 

Department should not impose any 

requirements in the VFC Program on 

parties who self-corrected participant 

loans beyond what is required by the 

IRS’s EPCRS. Rather, similar to the 

Department’s position described above 

with respect to self-correction of 

delinquent participant contributions 

and loan repayments, the Department 

believes self-correction of participant 

loan transactions is a new approach that 

merits a level of oversight to ensure that 

transactions are adequately corrected 

and that breaching fiduciaries have an 

appropriate level of accountability. 

Accordingly, under section 7.3(c), selfcorrectors are required to complete a 

SCC notice and submit the notice 

electronically to EBSA using the online 

VFC Program web tool located on 

EBSA’s website. Self-correctors are also 

required to complete and retain the 

documents required under section 6.2 

(including the Penalty of Perjury 

Statement). The SCC for participant loan 

transactions has been designed so that 

the burden of providing information to 

the Department is minimal and mirrors 

the IRS recordkeeping requirements 21

by requiring only contact information, a 

short description of type of participant 

loan failure, the loan amount or 

amounts in the case of multiple loans, 

the date the failure was identified, the 

date or dates of correction, the 

correction, and the number of 

participants affected by the correction. 

Unlike self-correctors under section 

7.1(b), who must complete a SCC 

Record Retention Checklist, selfcorrectors under section 7.3(c) do not 

need to complete that checklist. 

The existing correction method under 

sections 7.3(a) and (b) are retained to 

permit those that would prefer to correct 

under the EPCRS VCP to utilize the 

application-based process under the 

VFC Program. 

The Department also does not agree 

with the suggestion that section 2 be 

amended to provide that EBSA will not 

initiate a civil investigation or assess 

civil penalties for a self-correction of a 

participant loan failure corrected under 

the IRS’s EPCRS. Consistent with 

EBSA’s historical practice under the 

VFC Program, the Department generally 

does not anticipate taking enforcement 

action in response to a compliant 

application or eligible self-correction 

except in the unusual situation where 

EBSA becomes aware of possible 

criminal behavior, material 

misrepresentations or omissions in the 

VFC Program application or SCC notice, 

or other abuse of the Program.22

3. Other Revisions to the VFC Program 

(a) Revisions to Application Process 

Provisions for Delinquent Participant 

Contributions—Sections 7.1(a), (c) and 

(d) 

Section 7.1(a) has been renamed 

‘‘Delinquent Participant Contributions 

and Loan Repayments to Pension Plans 

under VFC Program Applications’’ to 

clarify that it applies only to corrections 

pursuant to Program applications in 

contrast to self-corrections under 

section 7.1(b). Additionally, section 

7.1(a) has been revised to reflect the 

Department’s amendment of its 

regulation defining plan assets in 2010 

to include participant loan repayments 

within these regulatory principles.23

Language has also been added to 

sections 7.1(a)(3)(ii)(A) and (iii)(A) to 

explain that the required narrative in 

the application must include a 

description of any steps taken to prevent 

future delinquencies. 

Sections 7.1(b) ‘‘Delinquent 

Participant Contributions to Insured 

Welfare Plans’’ and (c) ‘‘Delinquent 

Participant Contributions to Welfare 

Plan Trusts’’ are re-designated as 

sections 7.1(c) and (d) respectively. A 

change also has been made to each of 

these sections to clarify that the 

participant contributions were remitted 

to the insurance provider in section 

7.1(c)(3)(iii) and to the trust in section 

7.1(d)(3)(ii) rather than the plan as 

previously stated to clarify the 

provision. 


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Federal Register / Vol. 90, No. 9 / Wednesday, January 15, 2025 / Rules and Regulations 4199 

The Department also had proposed 

deleting language regarding Restoration 

of Profits as a correction method under 

sections 7.1(a)(2)(i) and (ii) and 

7.1(d)(2)(i) and (ii). The proposal was 

based on the view that this correction 

method may be unnecessary in this 

context, as applicants had not reported 

generating a profit through use of the 

delinquent amounts, and therefore, 

deletion would simplify the Program. 

Although the Department did not 

receive comments opposing these 

changes, the Department determined to 

retain Restoration of Profits as a 

potential correction method in the 2025 

VFC Program in order to leave the 

option available should it become 

relevant to an applicant in the future. 

Many commenters on the 2022 VFC 

Program proposed revisions generally 

supported expansive availability of the 

Program to promote timely correction of 

errors. 

The 2022 VFC Program proposed 

revisions also clarified that the VFC 

Program does not include a correction 

for delinquent matching employer 

contributions. However, as explained in 

the notice, to the extent that a Program 

application provides that the employer 

will apply the same correction formula 

to the employer matching contributions 

that it is required to apply to delinquent 

participant contributions, EBSA does 

not expect to reject or refuse to process 

such applications merely because 

delinquent employer matching 

contributions are included even though 

the ‘‘correction’’ of the employer 

contribution is not a covered transaction 

under the VFC Program, is not entitled 

to any relief under the Program, and 

will not be covered by any no action 

letter. 

(b) Revisions to Application Process 

Provisions for Loans—Sections 7.2(b), 

(c) and (d) 

The 2022 VFC Program proposed 

revisions included several changes to 

section 7.2 related to the application 

process for correction of certain plan 

loans made at below-market interest 

rates. The Department received no 

comments on the proposed revisions, 

and as described below, is adopting the 

changes as proposed. 

The original VFC Program included as 

an eligible transaction ‘‘Loan at BelowMarket Interest Rate to a Party in 

Interest with Respect to the Plan.’’ The 

corrective action in section 7.2(b) for 

such transactions requires the payment 

of the loan in full, plus penalties, and 

the greater of the Lost Earnings or 

Restoration of Profits. In addition to the 

required section 6.1 documentation, the 

2006 VFC Program required applicants 

to provide both a written copy of an 

independent commercial lender’s fair 

market interest rate determination under 

section 7.2(b)(3)(ii) and a copy of an 

independent fiduciary’s dated, written 

approval of the fair market interest rate 

determination under section 

7.2(b)(3)(iii). To reduce applicants’ 

costs, the 2025 VFC Program revises 

section 7.2(b)(3)(iii) to eliminate the 

requirement that an independent 

fiduciary validate in writing the process 

used to determine the fair market 

interest rate determination for loans in 

the amount of $10,000 or less. The 2025 

VFC Program also clarifies the wording 

in section 7.2(b)(3)(i) to require a 

narrative describing the process used to 

determine the interest rate at the time 

the loan was made. 

Section 7.2(c) ‘‘Loan at Below-Market 

Interest Rate to a Person Who is Not a 

Party in Interest With Respect to the 

Plan’’ is also a transaction that dates 

from the original VFC Program. Sections 

7.2(c)(2)(i) and (ii) are being reorganized to clarify the required 

correction for this transaction. Section 

7.2(c)(2)(ii) also adds an alternative to 

payment of the present value of the 

Principal Amounts from the Recovery 

Date to the loan’s maturity date. The 

present value payment method must be 

coupled with the borrower’s continued 

payment of the outstanding loan balance 

under the original repayment schedule 

for the duration of the loan. The new 

alternative permits the borrower’s 

payment of the amortized outstanding 

loan balance over the remaining 

payment schedule of the loan at the 

interest rate that would have been 

applicable if the loan had originally 

been made at the fair market interest 

rate. When this new alternative is used, 

the applicant must submit a copy of the 

loan repayment schedule for the reamortized loan repayments under 

section 7.2(c)(3)(iii). Any fair market 

interest rate must be determined by an 

independent commercial lender. The 

wording in section 7.2(c)(3)(i) is revised 

in a similar fashion to the wording in 

section 7.2(b)(3)(i) to require a narrative 

describing the process used to 

determine the interest rate at the time 

the loan was made. 

Section 7.2(d) ‘‘Loan at Below-Market 

Interest Rate Solely Due to a Delay in 

Perfecting the Plan’s Security Interest’’ 

is another transaction dating back to the 

original VFC Program. It provides a 

correction for when a plan made a 

purportedly secured loan to a non-party 

in interest, but a delay occurred in 

recording or otherwise perfecting the 

plan’s interest in the loan collateral, 

resulting in the loan being treated as an 

unsecured loan until the plan’s security 

interest was perfected. Section 7.2(d)(2) 

is re-organized to clarify the correction. 

Section 7.2(d)(2)(ii) specifically requires 

that the plan’s interest in the loan 

collateral be recorded or perfected. For 

situations where the delay in perfecting 

the loan’s security caused a permanent 

change in the risk characteristics of the 

loan, section 7.2(d)(2)(iii) requires the 

payment of the present value of the 

remaining Principal Amounts from the 

date the loan is fully secured to the 

maturity date of the loan. The 2025 VFC 

Program clarifies that the present value 

payment method must be coupled with 

the borrower’s continued payment of 

the outstanding loan balance under the 

original repayment schedule for the 

duration of the loan. Section 

7.2(d)(2)(iii) is also being amended in 

the 2025 VFC Program to add an 

alternative that permits the borrower’s 

payment of the amortized outstanding 

loan balance over the remaining 

payment schedule of the loan at the 

interest rate that would have been 

applicable for a loan with the changed 

risk characteristics. When this new 

alternative in the 2025 VFC Program is 

used, the applicant must submit a copy 

of the loan repayment schedule for the 

re-amortized loan repayments under 

section 7.2(d)(3)(iii). Any fair market 

interest rate must be determined by an 

independent commercial lender. 

In a related modification applicable to 

these three types of loans, section 5(a) 

is revised to include a specific 

explanation in section 5(a)(5) for when 

a commercial lender will be 

‘‘independent’’ using the same criteria 

as is used to determine the 

‘‘independence’’ of an appraiser. As an 

ongoing protection for plans and their 

participants, EBSA staff, as part of the 

application review process, will 

continue to monitor a commercial 

lender’s interest rate determination 

process and will object if it appears that 

a lender is not truly ‘‘independent’’ of 

the plan’s fiduciaries and parties in 

interest, or the interest rate 

determination process is otherwise 

flawed. 

(c) Revisions to Application Process 

Provisions for Purchases, Sales and 

Exchanges, Sales and Leasebacks— 

Section 7.4 

The 2022 VFC Program proposed 

revisions included several changes to 

Section 7.4(a) ‘‘Purchase of an Asset 

(Including Real Property) by a Plan from 

a Party in Interest,’’ Section 7.4(b) ‘‘Sale 

of an Asset (Including Real Property) by 

a Plan to a Party in Interest,’’ and 

Section 7.4(c) ‘‘Sale and Leaseback of 

Real Property to Employer.’’ The 

Department did not receive any 


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24The terms Principal Amount, Lost Earnings, 

and Restoration of Profits are defined in VFC 

Program section 5. 

comments on the proposed revisions, 

and as described below, is adopting the 

changes as proposed. 

Section 7.4(a) provides a method of 

correction for situations when the plan 

purchased an asset (including real 

property) from a party in interest in a 

transaction to which no prohibited 

transaction exemption applies. A plan’s 

purchase from a party in interest can be 

corrected under the VFC Program by 

reversing the transaction provided the 

plan receives the higher of the fair 

market value at resale or the Principal 

Amount plus the greater of either Lost 

Earnings or Restoration of Profits.24 As 

an alternative correction, a plan may 

retain the asset plus receive an amount 

resulting from application of a formulaic 

calculation, but only if an independent 

fiduciary determines that the plan will 

realize a greater benefit from this 

alternative correction than from the 

resale of the asset. Section 7.4(a)(2) of 

the 2025 VFC Program includes a new 

paragraph (iii) that provides a third 

method of correction in situations when 

the purchase cannot be reversed or the 

asset retained because the plan no 

longer owns the asset (e.g., sales, 

maturity, destruction). Under this new 

correction, the plan can receive a ‘‘cash 

settlement’’ if the asset has been sold 

and a Plan Official provides a statement, 

as required by section 7.4(a)(3)(v), that 

the sale was upon the advice of an 

independent fiduciary and not in 

anticipation of applying for relief under 

the Program. The determination of the 

cash settlement amount is prescribed in 

section 7.4(a)(2)(iii) and considers, 

among other factors, whether the plan 

realized a profit on the resale of the 

asset, or a loss on the resale, maturity or 

destruction of the asset. 

As a further clarifying change, the 

wording in section 7.4(a)(2)(ii) is 

modified to permit the subtraction of 

any earnings received on the asset up to 

the Recovery Date from Lost Earnings. 

The 2025 VFC Program also includes 

an amendment to section 7.4(b) ‘‘Sale of 

an Asset (Including Real Property) by a 

Plan to a Party in Interest.’’ Section 

7.4(b) provides a method of correction 

in situations when the plan sold an 

asset for cash to a party in interest in a 

transaction to which no prohibited 

transaction exemption applies. The 

amendment adds a condition to the 

section 7.4(b)(2)(ii) correction to permit 

the plan to receive the correction 

amount rather than to repurchase the 

asset by permitting a Plan Official to 

determine that the asset cannot be 

repurchased (e.g., destruction, 

maturity). This new condition in section 

7.4(b)(2)(ii) is an alternative to the 

section’s existing condition requiring an 

independent fiduciary to determine that 

the plan will recognize a greater benefit 

from this correction than the correction 

in section 7.4(b)(2)(i). As part of the 

required documentation under section 

7.4(b)(3)(iv), the Plan Official making 

this determination must provide a 

written explanation of why the asset 

cannot be repurchased. 

Section 7.4(c) ‘‘Sale and Leaseback of 

Real Property to Employer’’ provides a 

method of correction for a plan sponsor 

that sells a parcel of real property to the 

plan, which is then leased back to the 

plan sponsor and is not otherwise 

exempt. To more accurately reflect the 

statutory exemption provided by ERISA 

section 408(e), which does not limit the 

transaction to the plan sponsor, section 

7.4(c) is being revised to explicitly allow 

correction of leases to affiliates of the 

plan sponsor. The final associated class 

exemption, PTE 2002–51, has been 

revised for consistency with this 

amendment. 

(d) Revisions to Application Process 

Provisions for Illiquid Assets—Section 

7.4(f) 

The VFC Program includes correction 

for a transaction that permits a plan to 

divest, rather than continue to hold in 

its investment portfolio, a previously 

purchased asset that is determined to be 

illiquid and that had been acquired 

under circumstances described in the 

Program. The 2022 VFC Program 

proposed revisions retained those 

circumstances, as well as the correction 

method, which permits the sale of the 

asset to a party in interest provided the 

plan receives the higher of (A) the fair 

market value of the asset at the time of 

resale, without a reduction for the costs 

of sale; or (B) the Principal Amount, 

plus Lost Earnings as described in 

section 5(b). This correction 

encompasses a sale of the illiquid asset 

to a party in interest by the plan even 

if the original purchase of the asset by 

the plan was not a prohibited 

transaction or otherwise imprudent. 

However, the amendments modified the 

definition of Principal Amount to take 

into account the possibility that the 

transaction being corrected was neither 

a prohibited transaction nor a fiduciary 

breach. Section 7.4(f)(2)(ii) now defines 

Principal Amount as either the amount 

that would have been available had the 

Breach not occurred, or the plan’s 

original purchase price if the original 

purchase was not a prohibited 

transaction or imprudent. The 

amendments also clarify that in the case 

of an illiquid asset that is a parcel of real 

estate, no party in interest may own real 

estate that is contiguous to the plan’s 

parcel of real estate on the Recovery 

Date. There were no comments 

addressing these proposed revisions, 

and the 2025 VFC Program includes 

these changes as proposed. 

(e) Revisions to the VFC Program 

General Eligibility Criteria—Sections 3, 

4, and 5 

(i) Under Investigation Definition— 

Section 3(b)(3) 

To be eligible to correct under the 

VFC Program, a plan, applicant, or selfcorrector may not be ‘‘Under 

Investigation’’ as defined in section 

3(b)(3). The 2022 VFC Program 

proposed revisions included a 

modification to section 3(b)(3)(i) to state 

that a review by an EBSA Benefits 

Advisor is considered an investigation 

by EBSA that automatically makes an 

applicant or self-corrector ineligible to 

participate in the Program. However, the 

proposed change to section 3(b)(3) 

makes clear that a plan will not be 

considered to be Under Investigation 

merely because EBSA staff has 

contacted the plan, the applicant, the 

self-corrector, or the plan sponsor in 

connection with a participant complaint 

unless the participant complaint 

concerns the transaction described in 

the application or identified in the SCC 

notice and the plan has not received the 

correction amount due under the 

Program as of the date EBSA staff 

contacted the plan, the applicant, the 

self-corrector, or the plan sponsor. 

One commenter opposed including in 

the definition of Under Investigation 

contact from an EBSA staff member 

regarding a participant complaint 

arguing that the fiduciary may have not 

known the breach occurred until the 

fiduciary received the call from the 

EBSA staff member. The commenter 

further suggested that EBSA instead 

could put time parameters around when 

the fiduciary must act based on 

receiving information from the EBSA 

staff member. 

The VFC Program has limited 

eligibility for participation in the 

Program to plans and applicants that are 

not Under Investigation since its 

inception. The requirement does not 

turn on the fiduciary’s knowledge of the 

breach (or allegations of a breach), but 

rather on the absence of an investigation 

by the Department. An important 

premise of the VFC Program is that 

fiduciaries should not wait to see if the 

agency has spotted the potential breach 

or if a participant has complained to the 

agency before they take action to correct 


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violations. Instead, they should timely 

correct violations, and the VFC Program 

should be structured to avoid incentives 

for fiduciaries to adopt a ‘‘wait and see’’ 

approach focused on the likelihood of 

getting caught, instead of the need to 

correct violations promptly. 

Accordingly, the Department is not 

persuaded that the changes suggested by 

the commenter are consistent with the 

purpose of the provision and, 

accordingly, declines to adopt the 

suggestions. Rather, the 2025 VFC 

Program retains the definition of Under 

Investigation as proposed. 

(ii) Eligibility Exceptions—Section 4 

Section 4 of the Program provides that 

in order to be eligible for the VFC 

Program, the plan, applicant, or selfcorrector may not be Under 

Investigation (discussed above) and the 

VFC Program application must contain 

no evidence of potential criminal 

violations. The 2025 VFC Program 

added two new limited exceptions to 

the existing eligibility requirements to 

promote increase usage of the Program. 

The first exception involves the 

‘‘potential criminal violations’’ 

provision in paragraph (b)(2) and allows 

participation in the VFC Program by an 

innocent plan administrator, plan 

sponsor, or applicant for cases involving 

delinquent participant contributions 

and loan repayments when (1) all funds 

have been repaid to the plan; (2) the 

appropriate law enforcement agency has 

been notified of the alleged criminal 

activity; and (3) the applicant submits a 

statement (covered by the Penalty of 

Perjury Statement) with the application 

providing contact information for the 

law enforcement agency, certifying that 

the applicant was not involved in the 

alleged criminal activity, and reporting 

whether a claim relating to the potential 

criminal violation has been made under 

an ERISA section 412 fidelity bond. To 

accommodate this change, section 4(b) 

is re-named and re-designated as section 

4(b)(1), ‘‘In general.’’ EBSA always 

retains the right to reject any VFC 

Program application based on its review 

of the criminal activity involved. 

The second exception being added in 

the 2025 VFC Program is in section 4(d), 

which provides that an applicant is 

eligible to submit a ‘‘bulk application’’ 

when certain conditions are met. As 

noted in the 2022 VFC Program 

proposed revisions, over the past several 

years, EBSA has received Program 

applications from service providers to 

correct Breaches involving multiple 

plans. Some of these applications have 

involved hundreds, or even thousands, 

of plans, some of which are Under 

Investigation by EBSA. As noted 

elsewhere in this document, a plan is 

automatically ineligible to participate in 

the Program if it is considered ‘‘Under 

Investigation’’ as defined in section 

3(b)(3) of the Program. Consequently, 

such plans could not be included in any 

resulting no action letter. EBSA noted 

that it would like to be able to issue a 

no action letter to the service provider 

that covers all plans named in the 

application in certain circumstances. 

EBSA received one comment letter in 

support of the changes described in the 

2022 VFC Program proposed revisions, 

and the Program’s eligibility provision 

have been expanded as proposed. 

Specifically, to qualify: (1) the 

application must cover at least ten 

named plans and each plan must have 

participated in the transaction being 

corrected; (2) the applicant must be a 

service provider that is applying for 

relief only on its own behalf; (3) the 

applicant is currently or was providing 

services to each of the named plans at 

the time of the transaction being 

corrected; and (4) the service provider 

cannot be Under Investigation by EBSA 

and the corrective action cannot have 

been taken as a result of an EBSA 

investigation or review of any named 

plan. EBSA retains the right to 

determine whether the corrective action 

was taken as a result of any 

investigation, and to exclude any plan 

involved in the investigation from the 

no action letter. Also, section 6.1(d)(3) 

is being amended to permit a bulk 

applicant to provide for each named 

plan either the Annual Report Form 

5500 filing information or the plan 

sponsor’s nine-digit number (EIN). This 

procedural change will avoid undue 

delay while a service provider attempts 

to secure Annual Report Form 5500 

filing information, which may not be 

directly related to the Breach. Section 

6.1(g) is also being amended to permit 

a bulk applicant with knowledge of the 

transaction that is the subject of the 

application to sign and date the Penalty 

of Perjury Statement in which the 

applicant certifies that it is not Under 

Investigation by EBSA instead of 

requiring a signature from a plan 

fiduciary for each plan covered by the 

application. 

(iii) Lost Earnings De Minimis 

Exception—Section 5(e) 

The 2006 VFC Program provides a de 

minimis exception that applies to 

corrective distributions of less than $20 

each to former employees, their 

beneficiaries, and alternate payees who 

neither have account balances with nor 

have a right to future benefits from the 

plan if the applicant demonstrates that 

the cost of making a distribution to the 

individual exceeds the amount of the 

corrective payment. In that case, the 

distribution does not have to be paid to 

the individuals but rather the total 

amount can be paid to the plan. The 

2022 VFC Program proposed revisions 

included an increase in the de minimis 

amount to $35. Several commenters 

asked for a de minimis rule for Lost 

Earnings on delinquent remittance of 

participant contributions and 

participant loan repayments under 

which the correction would be limited 

to payment of the principal amount and 

there would not be an obligation to pay 

Lost Earnings to the participants or to 

the plan. The suggestion was not to be 

limited to former employees, their 

beneficiaries, and alternate payees who 

neither have account balances with nor 

have a right to future benefits from the 

plan. Some commenters argued that the 

costs of processing the corrective Lost 

Earnings payments should be avoided 

when the per participant amount is very 

small while other commenters proposed 

a total amount threshold of $50 or $75 

on a per event basis before correction 

would have to include Lost Earnings. 

The Department is not persuaded that 

the de minimis amount should be 

increased above the $35 amount in the 

proposal or that it should be expanded 

to include individuals with account 

balances or a right to future benefits 

from the plan. Rather, in the 

Department’s view, a de minimis level 

for the VFC Program should reinforce, 

not undercut, the overarching obligation 

that plan sponsors and other Plan 

Officials who fail to follow the legal 

requirements (such as for depositing 

participant contributions and loan 

repayments) should make full correction 

to the plan and its participants and 

beneficiaries. Accordingly, the 2025 

VFC Program retains the requirements 

in section 5(e) with the increase from 

$20 to $35. 

(f) Payment of Correction and Correction 

Costs by Plan Officials 

Although section 7 of the VFC 

Program provides that any Plan Official 

may correct a breach in accordance with 

section 5 and the applicable correction 

method, section 7.1(a) through (d) 

provides that any penalties, late fees or 

other charges must be paid by the 

employer. Several commenters 

suggested that the VFC Program 

expressly allow service providers, as 

well as employers, to pay Lost Earnings 

on delinquent remittance of participant 

contributions and loan repayments. The 

commenters argued that in certain 

circumstances when the amount of the 

delinquent participant contributions 

and loan repayments are small, the cost 


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25See 87 FR 71165 (citing the preamble to the 

2006 VFC Program, 71 FR 20262, 20264 (April 19, 

2006)). An employer would be considered a Plan 

Official for purposes of the Program. 

26Available at www.dol.gov/agencies/ebsa/ 

employers-and-advisers/plan-administration-andcompliance/retirement/missing-participantsguidance. 

27The preamble to the 2022 VFC Program 

proposed updates noted that, although a copy of the 

fidelity bond was originally required to be included 

with an application, the 2002 Program was 

modified to instead permit applicants to include 

information concerning the plan’s ERISA fidelity 

bond, and this informational requirement was 

eliminated in the 2006 Program. Although the 

informational requirement was not proposed to be 

added back to the Program, the preamble to the 

2022 proposed revisions emphasized that the prior 

modifications focused merely on streamlining the 

application process and should not be misconstrued 

as eliminating or modifying the ERISA section 412 

bonding requirements that protect plans against loss 

by reason of acts of fraud or dishonesty. For 

information on the ERISA section 412 bonding 

requirements, see FAB 2008–04, (Nov. 25, 2008); 29 

CFR 2550.412–1 (1975) and Part 2580 (1985). 

incurred by service providers to collect 

Lost Earnings from a plan sponsor or 

employer can exceed the amount of Lost 

Earnings. EBSA has decided to adopt 

this suggestion by modifying section 

7.1(a) through (d) to better conform with 

section 5(b) by stating that the cost of 

the correction must be paid by a Plan 

Official and not from the employee 

contributions and loan repayments. This 

change is consistent with existing 

section 5(c) of the VFC Program which 

provides that the responsible fiduciary, 

plan sponsor or other Plan Official must 

pay correction amounts and any costs of 

correction and also prohibits payment of 

any part of the correction amount or 

costs of correction from plan assets. 

Plan Official is defined in section 3(b)(2) 

as a plan fiduciary, plan sponsor, party 

in interest with respect to a plan, or 

other person who is in a position to 

correct a breach by filing an application 

or submitting a SCC notice. Although 

the service providers may pay Lost 

Earnings amounts resulting from 

another Plan Official’s breach, a proper 

VFC Program application or SCC notice, 

which includes the penalty of perjury 

statement by a plan fiduciary, must be 

completed or EBSA will not issue a no 

action letter or self-correction 

acknowledgment. 

In the 2022 VFC Program proposed 

revisions, the Department also stated 

that, with respect to a multiemployer 

plan or multiple employer plan, both 

the plan administrator and any 

contributing or adopting employer 

would be permitted to use the amended 

VFC Program and the SCC.25 The 

Department explained that the plan 

administrator of such a plan could 

apply on behalf of the entire plan and 

any participating employer may apply 

on its own behalf. Although no 

comments were received on that aspect 

of the 2022 proposal, to provide 

additional clarity, the Department made 

a change in this 2025 VFC Program to 

permit an employer in a multiemployer 

plan or multiple employer plan who 

wishes to correct on its own behalf to 

sign the application or SCC penalty of 

perjury statement and, regardless of the 

employer’s status as a plan fiduciary, 

the penalty of perjury statement need 

not be signed by another plan fiduciary. 

See sections 6.1 and 6.2. 

(g) Miscellaneous Modifications— 

Sections 5 and 7 

The 2025 VFC Program includes 

assorted other clarifying changes that 

were in the November 2022 notice 

designed to update the Program, assist 

Program users, and maintain 

consistency among provisions. For 

example, section 5(d) ‘‘Distributions’’ is 

revised to reflect the cessation of both 

the IRS and Social Security 

Administration letter forwarding 

services for missing participants, and to 

provide a reference to the Missing 

Participants—Best Practices for Pension 

Plans guidance issued by the 

Department.26 Another example is 

sections 7.3(a)(3) and (b)(3). Those 

sections provide that only certain 

supporting documentation must be 

provided with the application. The 

words ‘‘unless otherwise requested by 

EBSA’’ have been added to confirm that 

EBSA may, in individual cases, request 

copies of other supporting 

documentation. Similarly, references to 

self-corrector, self-correction, and the 

SCC notice have been added to various 

provisions where appropriate. 

Additionally, in sections 7.4(d) and (e) 

dealing with transactions at greater and 

less than fair market value respectively, 

the documentation requirement for the 

qualified, independent appraiser’s 

report has been revised to correctly 

specify value rather than fair market 

value at the time of the transaction. In 

section 7.5 (‘‘Benefits’’) concerning the 

distribution of overvalued plan assets in 

a defined contribution plan, the 

correction specifically requires the 

restoration to the plan of the amount 

that exceeded the paid distribution 

amount to which all affected 

participants were entitled under the 

terms of the plan, plus Lost Earnings as 

described in section 5(b) on the 

overpaid distributions.27

4. Decisions on Requests for Comment 

on Further Expansion of VFC Program 

The preamble to the 2022 VFC 

Program proposed updates included a 

solicitation of public comments on 

potential further expansion or revision 

of the Program in four specific areas: (i) 

missing and nonresponsive participants 

and beneficiaries, (ii) integration of the 

VFC Program with corrections under the 

IRS’s EPCRS, (iii) adoption of a preaudit compliance program, and (iv) 

electronic VFC Program submissions. 

Commenters were generally supportive 

of further changes to the VFC Program 

in these areas. 

With respect to revising the program 

to either permit or require that VFC 

Program applications be submitted 

electronically, the Department intends 

to continue to evaluate alternative 

approaches to e-submission, e.g., email 

versus an internet or web-based portal, 

but has decided to continue the current 

process under which the EBSA Regional 

Offices that administer the VFC Program 

application process can make available 

email boxes that can be used for esubmission of VFC Program 

applications and supporting documents. 

Text was added to the VFC Program to 

encourage applicants to contact the 

relevant Regional Office about email 

submission options and format 

requirements, e.g., penalty of perjury 

statements. 


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28Regulatory Planning and Review, 58 FR 51735 

(Oct. 4, 1993). 29 Improving Regulation and Regulatory Review, 

76 FR 3821 (Jan. 18, 2011). 30 44 U.S.C. 3506(c)(2)(A) (1995). 31 5 U.S.C. 601 et seq. (1980). 32 2 U.S.C. 1501 et seq. (1995). 33Federalism, 64 FR 153 (Aug. 4, 1999). 34 5 U.S.C. 804(2) (1996). 

35Employee Benefits Security Administration, 

Private Pension Plan Bulletin: Abstract of 2021 

Form 5500 Annual Reports, (September 2023). 

36U.S. Department of Labor, EBSA calculations 

using the 2022 Medical Expenditure Panel Survey, 

Insurance Component (MEPS–IC), and 2020 Census 

County Business Patterns. 

37U.S. Department of Labor, EBSA calculations 

using non-health welfare plan Form 5500 filings 

and projecting non-filers using estimates based on 

the non-filing health universe. 

However, with respect to missing and 

nonresponsive participants and 

beneficiaries and the other two areas 

identified for potential expansion, the 

Department believes they all involve 

important fiduciary compliance issues 

and central aspects of the Program that 

require careful development of issues 

and options. For example, with respect 

to revising the Program to extend to 

Breaches in connection with missing 

and nonresponsive participants and 

beneficiaries, the Department may 

consider ways to incorporate, as 

corrective action, the provision of 

information to the Department for its 

Retirement Savings Lost and Found 

searchable database described in ERISA 

section 523. While the Department has 

not included these areas of expansion in 

the 2025 VFC Program, it will consider 

these issues further and may propose 

expansion of the Program in these areas 

in a separate project. 

C. Regulatory Impact Analysis 

The following is a discussion of the 

examination of the effects of this 

regulatory action as required by 

Executive Order 12866,28 Executive 

Order 13563,29 the Paperwork 

Reduction Act of 1995,30 the Regulatory 

Flexibility Act,31 section 202 of the 

Unfunded Mandates Reform Act of 

1995,32 Executive Order 13132,33 and 

the Congressional Review Act.34

1. Executive Orders 12866 and 13563 

Executive Orders 12866 (as amended 

by 14094) and 13563 direct agencies to 

assess all costs and benefits of available 

regulatory alternatives and, if regulation 

is necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing and 

streamlining rules, and of promoting 

flexibility. 

Under Executive Order 12866, 

‘‘significant’’ regulatory actions are 

subject to the requirements of the 

executive order and review by the Office 

of Management and Budget (OMB). As 

amended by Executive Order 14094, 

section 3(f) of Executive Order 12866 

defines a ‘‘significant regulatory action’’ 

as any regulatory action that is likely to 

result in a rule that may: (1) have an 

annual effect on the economy of $200 

million or more (adjusted every three 

years by the Administrator of the Office 

of Information and Regulatory Affairs 

(OIRA) for changes in gross domestic 

product); or adversely affect in a 

material way the economy, a sector of 

the economy, productivity, competition, 

jobs, the environment, public health or 

safety, or State, local, Territorial, or 

Tribal governments or communities; (2) 

create a serious inconsistency or 

otherwise interfere with an action taken 

or planned by another agency; (3) 

materially alter the budgetary impacts of 

entitlement grants, user fees, or loan 

programs or the rights and obligations of 

recipients thereof; or (4) raise legal or 

policy issues for which centralized 

review would meaningfully further the 

President’s priorities or the principles 

set forth in the Executive order, as 

specifically authorized in a timely 

manner by the Administrator of OIRA in 

each case. 

For this purpose, a ‘‘rule’’ includes 

‘‘an agency statement of general 

applicability and future effect . . . that 

is designed to implement, interpret, or 

prescribe . . . policy or to describe the 

procedure or practice requirements of 

an agency.’’ 

OMB has determined that this action 

is significant under section 3(f) 

Accordingly, OMB has reviewed this 

action, and the Department has assessed 

the costs and benefits of its amended 

enforcement policy and related PTE 

proposal. 

The VFC Program is designed to 

provide an efficient, cost-effective 

method for Plan Officials to correct a 

variety of ERISA fiduciary breaches and 

prohibited transactions and receive 

Departmental recognition of the 

correction. Specifically, the 

amendments to the Program add a SCC 

for delinquent transmittal of participant 

contributions and loan repayments to a 

pension plan under certain 

circumstances; clarify some existing 

transactions eligible for correction 

under the Program; expand the scope of 

other transactions currently eligible for 

correction; and simplify certain 

administrative or procedural 

requirements for participation in and 

correction of transactions under the VFC 

Program. In addition, the amendments 

to the Program add a SCC for certain 

participant loan failures self-corrected 

under the IRS’s EPCRS. 

The Department expects that the 

amendments to the VFC Program will 

increase efficiency and accessibility for 

potential applicants and self-correctors. 

These changes, described further below, 

include in part, a new SCC for 

delinquent participant contributions 

and loan repayments involving Lost 

Earnings less than or equal to $1,000, 

acceptance of bulk applications with 

modified requirements, and increased 

flexibility in the procedures for a variety 

of other transactions. These changes 

also include elimination from the 

exemption of a three-year limitation for 

VFC Program applicants that take 

advantage of the relief provided by the 

VFC Program and the exemption for a 

similar type of transaction. 

(a) Affected Entities 

All pension and welfare plans can 

utilize the VFC Program if they have a 

fiduciary breach for which there is an 

eligible transaction. Parties that are 

covered by section 4975 of the Code can 

rely on the related class exemption for 

excise tax relief for transactions 

identified in the exemption that are 

corrected under the VFC Program. In 

2021 there were 718,736 defined 

contribution plans and 46,388 defined 

benefit plans that would be impacted by 

these changes.35 In 2022 there were an 

estimated 2,790,000 health plans 36 and 

630,000 other welfare benefit plans that 

would also be impacted by these 

changes.37


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4204 Federal Register / Vol. 90, No. 9 / Wednesday, January 15, 2025 / Rules and Regulations 

38The Department estimates that the SCC will 

streamline the process for the 73 percent of small 

and large VFC Program applicants involving Lost 

Earnings less than or equal to $1,000. 

39 1,226 applicants × 73.4% × 1.01 = 909 selfcorrections. 

40 1,226 applicants × (100% minus 74.3%) = 326 

non-bulk applicants. 

41The Department estimates that the SCC will 

streamline the process for 73 percent of small and 

large VFC cases involving Lost Earnings less than 

or equal to $1,000. 

An average of 1,226 applicants per 

year used the VFC Program from 2021 

to 2023. The Department estimates that 

the 73 percent of VFC Program 

applicants will move to the SCC.38 The 

Department also estimates a one percent 

increase in the number of selfcorrections, or 909 self-corrections,39

resulting from the removal of the threeyear limitation provision for selfcorrectors. 

The Department also projects that 

changes to the VFC Program will result 

in two new Program users filing bulk 

applications and 326 Program users 

filing non-bulk applications.40 Please 

see Table 1 for the number of plans that 

will utilize the VFC Program and 

exemption. 

TABLE 1—NUMBER OF PLANS THAT

WILL UTILIZE THE VFC PROGRAM

AND EXEMPTION

Number 

of plans 

Filing Bulk Applications ................ 2 

Filing Non-Bulk Applications ......... 326 

SCC .............................................. 909 

Total ....................................... 1,237 

(b) Benefits and Costs 

The Department believes that the 

benefits of the amended VFC Program 

and related PTE justify its costs. 

Because participation is voluntary, the 

VFC Program imposes no costs unless 

Plan Officials choose to avail 

themselves of the opportunity to correct 

a potential fiduciary breach under the 

terms of the VFC Program. Plans are 

expected to only utilize the program if 

the benefits of using the program exceed 

the costs. The Department expects that 

the revised VFC Program will be easier 

and more useful for potential 

applicants. The greater efficiency and 

accessibility that will result from the 

availability of a SCC for delinquent 

participant contributions, and other 

expansions and clarifying modifications 

of the Program, are expected to make the 

Program easier to use, to lessen the cost 

of participation in many instances, and 

to increase efficiency for both applicants 

and reviewers. 

The VFC Program provides incentives 

for fiduciaries to correct a potential 

fiduciary breach. Benefits for Plan 

Officials who are granted relief under 

the VFC Program include elimination of 

risks arising from an otherwise 

uncorrected fiduciary breach, as well as 

savings of resources that otherwise 

might have been needed to defend 

against a civil action by the Department 

based on the breach. The VFC Program 

has been very successful to date in 

encouraging and facilitating the 

correction of violations. 

The changes to the VFC Program will 

allow Plan Officials to obtain the 

benefits of the program at a reduced 

cost. The Department hopes that this 

cost reduction may encourage other 

Plan Officials to correct previously 

undetected and unreported fiduciary 

breaches and reimburse plan losses, 

which would enhance the retirement 

income security of participants and 

beneficiaries; however, it has no data to 

reliably predict the extent of the 

increased usage. The Department will 

continue to actively monitor the use of 

the VFC Program and evaluate its 

benefits and costs. The Department is 

unable to predict with certainty either 

the reduction in application costs that 

will arise from the revisions to the 

Program, or the potential increase in 

participation that will be associated 

with these revisions. One commenter 

requested the Department collect 

additional data from the VFCP 

applications to assess the VFC Program 

and SCC. The commenter suggested 

collecting data on the characteristics of 

the corrections and plans utilizing the 

program, including the amount of 

correction, the types of transactions 

corrected, the size of retirement plans, 

the date of the prohibited transaction, 

and the date by which participant 

contributions or loan repayments were 

supposed to be remitted to the plan. The 

commenter also suggested to conduct 

follow-up surveys or interviews with 

plans that use the VFC program. While 

this data could be beneficial, the 

Department seeks to minimize 

administrative costs. 

An additional and significant benefit 

of the VFC Program accrues to 

participants and beneficiaries through 

the correction of fiduciary breaches and 

the restoration to the plan of amounts 

representing losses or improperly 

generated profits arising from 

impermissible transactions, resulting in 

greater security of plan assets and future 

benefits. Encouraging greater 

participation in the VFC Program by 

lowering the costs of using it could help 

reduce the need for plan participants to 

pursue legal action. 

These changes to the VFC Program 

will reduce associated costs by reducing 

the number of hours required to make 

corrections and file applications. 

Compared with the existing VFC 

Program, the Department expects the 

amended Program’s per-user costs to be 

lower because the amendments could 

move 73 percent of the expected VFC 

Program applications to the SCC.41

Moreover, implementing the SCC will 

reduce the recordkeeping and reporting 

cost for Plan Officials with small 

amounts of delinquent participant 

contributions and loan repayments, 

because they no longer will have to 

submit an application to the Department 

with extensive supporting 

documentation, but instead will merely 

submit a self-correction notice with 

minimal data to the Department and 

provide corroborating documentation to 

the plan administrator. 

This SCC also provides additional 

flexibility and potentially increase use 

to Plan Officials by eliminating the 

three-year limitation in the PTE. Please 

see Table 2 for estimates and cost 

savings for VFC Program applicants. 

The estimates presented in Column A 

are obtained using similar assumptions 

and methods as in Column B. The 

estimates presented in Column B are 

based on the estimates presented in 

Table 7. 


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42Over 10 years, the costs associated with the 

VFCP Program and associated class exemption 

would total approximately $8.8 million, annualized 

to $1 million per year (using a 3 percent discount 

rate). 

43The Department estimates that the SelfCorrection Component will streamline the process 

for the 73 percent of small and large VFC Program 

applicants involving Lost Earnings less than or 

equal to $1,000. 

TABLE 2—COST SAVINGS FOR VFC PROGRAM APPLICANTS FROM PROGRAM AND EXEMPTION CHANGES

Cost before 

program and 

exemption changes 

Cost after program 

and exemption 

changes 

Cost savings 

(A) (B) (A¥B) 

Traditional VFC Program (annual) .......................................................................... $765,570 $215,876 $549,693 

SCC (annual) ........................................................................................................... .................................. 355,910 ¥355,910 

VFCP Exemption (annual) ....................................................................................... 120,236 120,236 0

Total (annual) ................................................................................................... 885,806 692,023 193,784 

Plans or their service providers will 

need to familiarize themselves with the 

changes to the VFC Program and 

amendments to the PTE. Service 

providers may help multiple plans in a 

year or across years, so while it could 

take a service provider multiple hours to 

review the amended requirements, the 

actual burden impact on an individual 

plan would be less. The Department 

assumes that it will take two hours per 

plan to review the changes and fill out 

the VFCP application. Please see Table 

3 for calculations and burden totals. 

TABLE 3—HOUR BURDEN FOR RULE FAMILIARIZATION

Number of 

entities 

Number of 

hours per 

entity 

Total hour 

burden 

Hourly 

wage 

Dollar 

equivalent 

of hour 

burden 

(A) (B) (A × B) (C) (A × B × C) 

Compensation and benefits managers familiarize with the changes to 

the VFC Program and Exemption (first year) ........................................ 1,237 2 2,474 $124.75 $308,632 

Total .................................................................................................... 1,237 .................... 2,474 .............. 308,632 

Overall, the Department estimates that 

the costs of the VFC Program and the 

associated class exemption, in their 

amended forms, would total 

approximately $690,798 ($669,600 in 

annual equivalent costs reflecting the 

monetized cost of the work performed 

by in-house personnel and outside 

service providers and $21,198 in annual 

cost burden reflecting the cost of 

materials and postage). Over 10 years, 

the costs associated with the VFC 

Program and associated class exemption 

would total approximately $7.5 million, 

annualized to $1 million per year (using 

a 7 percent discount rate).42

2. Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act of 1995 (PRA 95) (44 

U.S.C. 350(c))(2)(A)), the Department 

solicited comments concerning the 

information collection request (ICR) 

included in the 2022 VFC Program 

proposed revisions. At the same time, 

the Department also submitted the ICR 

to OMB, in accordance with 44 U.S.C. 

3507(d). 

The Department received a comment 

that specifically addressed the 

paperwork burden analysis of the 

information collection requirements 

contained in the 2022 VFC Program 

proposed revisions. The commenter 

attempted to adjust the labor wage rates; 

however, the Department has already 

accounted for inflation in the labor 

rates. 

The changes made by these final rules 

affect the existing OMB control number, 

1210–0118. A copy of the ICR for OMB 

Control Number 1210–0118 may be 

obtained by contacting the PRA 

addressee listed in the following 

sentence or at www.RegInfo.gov. For 

additional information contact, U.S. 

Department of Labor, Employee Benefits 

Security Administration, Office of 

Research and Analysis, Attention: PRA 

Officer, 200 Constitution Avenue NW, 

Room N–5718, Washington, DC 20210; 

or send to ebsa.opr@dol.gov. 

The amended VFC Program, described 

above, includes a SCC for delinquent 

participant contributions and loan 

repayments to pension plans involving 

Lost Earnings less than or equal to 

$1,000, streamlined requirements for 

bulk applications, and it expands and 

modifies transactions that are currently 

eligible for the VFC Program. The SCC 

permits applicants to self-correct, and 

then provide EBSA with a notice of the 

self-correction through the online VFC 

Program web tool. Service providers are 

able to submit bulk applications to the 

VFC Program, under the existing terms 

and requirements of the Program, with 

some easing of the eligibility and 

information requirements. Under the 

new bulk applicant provisions, the bulk 

applicant will receive a no action letter 

providing relief only to the service 

provider correcting transactions 

involving each of the plans named in 

the application. 

An average of 1,226 applicants per 

year used the VFC Program from 2021 

to 2023. The Department estimates that 

the 73 percent of VFC Program 

applicants will move to the SCC.43

Please see Table 1 for the number of 

plans that will utilize the VFC Program 

and associated class exemption PTE 

2002–51. 

In addition to the VFC Program, the 

Department is publishing a final 

amendment to the associated class 

exemption PTE 2002–51, which applies 

only to qualifying applicants and selfcorrectors participating in the VFC 

Program. The exemption is currently 

unavailable to VFC Program applicants 

that have, within the previous three 

years, taken advantage of the relief 


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44 It should be noted that the required checklist 

for applications filed with the Department under 

the Program appears twice within the Appendices 

to the Program. While it is required to be submitted 

only once, it is included as the separate Appendix 

B for applicants who do not choose to use the 

model application in Appendix E, and separately as 

the final item in the model application for ease of 

use for those who do choose to use the model 

application. 

45United States Postal Service, Priority Mail, 

(2024), https://www.usps.com/ship/prioritymail.htm. 

46The mailing cost is calculated in the following 

manner: (1 page × $0.73 for postage + $0.05 for 

material costs) = $0.78. 

provided by the VFC Program and the 

exemption for a similar type of 

transaction. The three-year provision 

was initially included in the exemption 

to prevent parties from becoming lax in 

complying with fiduciary and other 

ERISA duties because of the availability 

of the exemption. Based on the 

Department’s experience with the VFC 

Program and the exemption, the 

Department concluded that the risk of 

such behavior is low and therefore is 

eliminating the three-year limitation. 

The overall paperwork burden for the 

amended VFC Program and the 

amended PTE 2002–51 is provided 

below. 

VFC Program 

For the VFC Program, the Department 

estimates that Plan Officials will devote 

2.5 hours of clerical staff gathering 

paperwork, one hour of a compensation 

and benefits manager calculating Lost 

Earnings, and one hour of clerical staff 

engaging in recordkeeping activities for 

each non-bulk application or selfcorrection. The Department estimates 

that for each bulk application, Plan 

Officials will devote 25 hours of clerical 

staff gathering paperwork, 10 hours of a 

compensation and benefits manager 

calculating Lost Earnings, and 10 hours 

of clerical staff engaging in 

recordkeeping activities. Please see 

Table 4 for calculations and burden 

totals. 

TABLE 4—HOUR BURDEN OF VFC PROGRAM

Number 

of entities 

Number of 

hours per 

entity 

Total hour 

burden 

Wage 

rate 

Dollar 

equivalent 

of hour burden 

(A) (B) (A × B) (C) (A × B × C) 

Traditional VFC Program 

Compensation and benefits managers calculate Lost Earnings 

(non-bulk) ....................................................................................... 326 1 326 $140.32 $45,744 

Clerical staff gather information (non-bulk) ....................................... 326 2.5 815 65.99 53,782 

Clerical staff maintain recordkeeping (non-bulk) ............................... 326 1 326 65.99 21,513 

Compensation and benefits managers calculate Lost Earnings 

(bulk) ............................................................................................... 2 10 20 140.32 2,806 

Clerical staff gather information (bulk) ............................................... 2 25 50 65.99 3,300 

Clerical staff maintain recordkeeping (bulk) ...................................... 2 10 20 65.99 1,320 

SCC 

Compensation and benefits managers calculate Lost Earnings ....... 909 1 909 140.32 127,551 

Clerical staff gather information ......................................................... 909 2.5 2,273 65.99 149,962 

Clerical staff maintain recordkeeping ................................................ 909 1 909 65.99 59,985 

Total ............................................................................................ 1,237 .................... 5,648 .............. 465,963 

The Department estimates that 

external service providers will spend 

about 10 minutes completing and 

submitting the online SCC notice, 20 

hours completing and submitting bulk 

applications, and two hours completing 

and submitting all other applications.44

The mailing cost per application is 

approximately $10.45 Please see Table 5 

for calculations and burden totals. 

TABLE 5—HOUR AND COST BURDEN OF SERVICE PROVIDERS FOR VFC PROGRAM

Number 

of entities 

Number of 

hours per 

entity 

Total hour 

burden 

Wage 

rate 

Dollar 

equivalent 

of hour 

burden 

Mailing cost 

per entity Cost burden 

(A) (B) (A × B) (C) (A × B × C) (D) (A × D) 

Service providers prepare information (non-bulk) .................... 326 2 652 $121.53 $79,238 $10.10 $3,293 

Service providers prepare information (bulk) ............................ 2 20 40 121.53 4,861 10.10 20 

Service providers maintain recordkeeping for SCC ................. 909 0.17 152 121.53 18,412 ...................... ....................

Total ................................................................................... 1,237 .................... 844 .............. 102,511 ...................... 3,313 

VFCP Class Exemption (PTE 2002–51) 

The Department estimates that all 

self-correctors and VFC Program 

applicants will use the amended class 

exemption. The Department has 

determined that service providers will 

prepare the documentation required by 

the exemption which will require 

approximately one hour for completion 

and delivery. VFC Program applicants 

are required to send notices to their 

participants and beneficiaries. The 

mailing cost per notice is $0.78.46 Please 

see Table 6 for calculations and burden 

totals. 


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47 5 U.S.C. 601 et seq. (1980). 

48 5 U.S.C. 551 et seq. (1946). 49 5 U.S.C. 604 (1980). 

50Employee Benefits Security Administration, 

Private Pension Plan Bulletin: Abstract of 2021 

Form 5500 Annual Reports, (September 2023). 

51U.S. Department of Labor, EBSA calculations 

using the 2022 Medical Expenditure Panel Survey, 

Insurance Component (MEPS–IC), and 2020 Census 

County Business Patterns. 

52As discussed earlier in this regulatory impact 

analysis, the Department estimates a one percent 

increase in the number of self-corrections, or 909 

self-corrections, resulting from the removal of the 

three-year limitation provision for self-correctors. 

Additionally, the Department also projects that 

changes to the VFC Program will result in two new 

Program users filing bulk applications and 326 

Program users filing non-bulk applications. Thus, 

the number of fiduciaries making use of the VFC 

Program in a given year is calculated in the 

following manner: 909 self-corrections + 326 nonbulk applications + 2 bulk applications = 1,237. 

TABLE 6—HOUR AND COST BURDEN OF VFCP EXEMPTION

Number 

of entities 

Number of 

hours per 

entity 

Total hour 

burden 

Wage 

rate 

Dollar 

equivalent 

of hour 

burden 

Mailing cost 

per entity Cost burden 

(A) (B) (A × B) (C) (A × B × C) (D) (A × D) 

Service providers prepare information ...................................... 389 1 389 $121.53 $47,235 ...................... ....................

Participants receiving notices for exemption through mail, prepared by service providers .................................................... 24,500 0.03 817 65.99 53,892 $0.78 $19,110 

Total .......................................................................................... 24,889 .................... 1,205 .............. 101,126 ...................... 19,110 

Summary 

Please see Table 7 for the total annual 

hour and cost burden for the 

information collection arising from the 

VFC Program and the exemption. 

TABLE 7—TOTAL ANNUAL HOUR AND COST BURDEN

Total hour 

burden 

Total dollar 

equivalent of 

hour burden 

Total cost 

burden Total cost 

(A) (B) (C) (B + C) 

VFC Program ................................................................................................... 6,491 $568,473 $3,313 $571,786 

VFCP Exemption ............................................................................................. 1,205 101,126 19,110 120,236 

Total .......................................................................................................... 7,696 669,600 22,423 692,023 

In summary, the categories in the 

table below encompass the numbers for 

both the VFC Program and the amended 

class exemption: 

Type of Review: Revision of currently 

approved collection of information. 

Agency: Department of Labor, 

Employee Benefits Security 

Administration. 

Title: Voluntary Fiduciary Correction 

Program. 

OMB Number: 1210–0118. 

Affected Public: Individuals or 

households; Business or other for-profit; 

Not-for-profit institutions. 

Respondents: 1,237. 

Frequency of Response: On occasion. 

Responses: 59,991. 

Estimated Total Burden Hours: 7,696. 

Total Annual Cost (Operating and 

Maintenance): $22,423. 

3. Regulatory Flexibility Analysis 

The Regulatory Flexibility Act 

(RFA) 47 imposes certain requirements 

with respect to Federal rules that are 

subject to the notice and comment 

requirements of section 553(b) of the 

Administrative Procedure Act, or any 

other law, and are likely to have a 

significant economic impact on a 

substantial number of small entities.48

Unless the head of an agency certifies 

that a final rule will not have a 

significant economic impact on a 

substantial number of small entities, 

section 604 49 of the RFA requires the 

agency to present a final regulatory 

flexibility analysis of these final rules. 

This document describes an 

enforcement policy of the Department 

that is not being issued as a general 

notice of final rulemaking. Therefore, 

the RFA does not apply. However, the 

Department is also issuing a final 

amendment to a class exemption (PTE 

2002–51) to which the Regulatory 

Flexibility Act does apply. The 

Department certifies that the 

amendments to PTE 2002–51 will not 

have a significant economic impact on 

a substantial number of small entities. 

However, EBSA considered the 

potential costs and benefits of this 

action for small pension plans and the 

Plan Officials in developing the final 

amendment to the class exemption and 

believes that its greater simplicity and 

accessibility would make the Program 

more useful to small employers who 

wish to avail themselves of the relief 

offered under the exemption. Below is 

the factual basis for the certification. 

As mentioned previously, all pension 

and welfare plans can utilize the VFC 

Program with the related PTE if they 

have a fiduciary breach for which there 

is an eligible transaction. In 2021 there 

were 630,423 small defined contribution 

plans and 39,673 small defined benefit 

plans and plan officials that would be 

impacted by these changes.50 In 2022 

there were 2,710,128 small health plans 

that would also be impacted by these 

changes.51 Currently 1,226 plan 

fiduciaries make use of the VFC 

Program in a given year and the 

Department projects a small increase to 

1,237 fiduciaries making use of the VFC 

Program in a given year.52 Please see 

Table 1 for the number of plans that will 

utilize the VFC Program and exemption. 

The Department is amending the 

related PTE so that excise tax relief will 

be available for transactions that are 

corrected under the SCC. The 

Department is also amending the PTE to 

eliminate the three-year limitation. 

Thus, all plans eligible to use the VFC 

Program would be eligible to use the 

PTE more than just once every three 

years. However, the Department 


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53 In 2021, there were 765,124 pension plans. 

(Source: Employee Benefits Security 

Administration, Private Pension Plan Bulletin: 

Abstract of 2021 Form 5500 Annual Reports, 

(September 2023).) In 2022, there were 630,000 

welfare benefit plans. (Source: U.S. Department of 

Labor, EBSA calculations using non-health welfare 

plan Form 5500 filings and projecting non-filers 

using estimates based on the non-filing health 

universe.) Thus, 0.08% of all pension and welfare 

plans will use the PTE in a given year. (909 plans/ 

(765,124 plans + 630,000 welfare benefit plans) = 

0.07 percent.) 

54Under Reorganization Plan No. 4 of 1978, supra 

n. 1, the Secretary of the Treasury retains 

interpretive authority over Code sections 4975(a) 

and (b). 

55With an hourly rate for the in-house 

compensation and benefits manager of $140.32 per 

hour and one hour of burden allocated to a plan, 

the burden be plan would be $140 (rounded). 

estimates that, of the total number of 

pension and welfare plans significantly 

less than one percent will use the PTE 

in a given year.53

The final amended PTE provides 

excise tax relief for self-correctors if 

they pay the amount of the excise tax 

owed to the plan. The SCC can only be 

used in situations where the size of Lost 

Earnings is $1,000 or less. Code section 

4975(a) imposes an excise tax on each 

prohibited transaction equal to 15 

percent of the amount involved with 

respect to the prohibited transaction for 

each year (or part thereof) in the taxable 

period. Therefore, the maximum excise 

tax owed for each year would generally 

not exceed $150.54

Plans or their service providers will 

need to familiarize themselves with the 

amendments to the PTE. Service 

providers can help multiple plans in a 

year or across years, so, although it 

could take a service provider multiple 

hours to review the amended 

requirements, the actual burden impact 

on an individual plan would be less. 

The Department estimates that all selfcorrectors will use the new provisions 

of the amended class exemption. The 

per-plan cost for rule familiarization 

would be $140.55

For plans with the maximum Lost 

Earnings of $1,000 and an excise tax of 

15 percent the maximum excise tax in 

each year would generally not exceed 

$150. Including the cost of rule 

familiarization of $140, the total 

expense could be $290 in a year. Based 

on the foregoing, the Department hereby 

certifies that these final amendments 

will not have a significant economic 

impact on a substantial number of small 

entities. Therefore, the Department has 

not prepared a Final Regulatory 

Flexibility Analysis. 

4. Unfunded Mandates Reform Act 

For purposes of the Unfunded 

Mandates Reform Act of 1995 (Pub. L. 

104–4), as well as Executive Order 

12875, this action does not include any 

Federal mandate that may result in 

expenditures by State, local, or Tribal 

governments in the aggregate of more 

than $100 million, adjusted for 

inflation, or increase expenditures by 

the private sector of more than $100 

million, adjusted for inflation. 

5. Federalism Statement 

Executive Order 13132 (August 4, 

1999) outlines fundamental principles 

of federalism and requires the 

adherence to specific criteria by Federal 

agencies in the process of their 

formulation and implementation of 

policies that have ‘‘substantial direct 

effects’’ on the States, the relationship 

between the national government and 

States, or on the distribution of power 

and responsibilities among the various 

levels of government. Federal agencies 

promulgating regulations that have 

federalism implications must consult 

with State and local officials and 

describe the extent of their consultation 

and the nature of the concerns of State 

and local officials. This action does not 

have federalism implications because it 

has no substantial direct effect on the 

States, on the relationship between the 

national government and the States, or 

on the distribution of power and 

responsibilities among the various 

levels of government. Section 514 of 

ERISA provides, with certain exceptions 

specifically enumerated, that the 

provisions of titles I and IV of ERISA 

supersede any and all laws of the States 

as they relate to any employee benefit 

plan covered under ERISA. The 

amendments of the VFC Program in this 

document do not alter the fundamental 

provisions of the statute with respect to 

employee benefit plans, and as such 

would have no implications for the 

States or the relationship or distribution 

of power between the national 

government and the States. 

6. Congressional Review Act 

The VFC Program is subject to the 

Congressional Review Act provisions of 

the Small Business Regulatory 

Enforcement Fairness Act of 1996 (5 

U.S.C. 801 et seq.) and will be 

transmitted to the Congress and the 

Comptroller General for review. OIRA 

has determined that The Program does 

not meet the criteria set forth in 5 U.S.C. 

803(2) under the Act. The Program is 

not a ‘‘major rule’’ as that term is 

defined in 5 U.S.C. 804. 

Authority: Authority: Secretary of Labor’s 

Order 1–2011, 77 FR 1088 (January 9, 2012). 

29 U.S.C. 1132(a)(2) and (a)(5), 1136(b). 

Voluntary Fiduciary Correction 

Program 

Section 1. Purpose and Overview of the VFC 

Program 

Section 2. Effect of the VFC Program 

Section 3. Definitions 

Section 4. VFC Program Eligibility 

Section 5. General Rules for Acceptable 

Corrections 

(a) Fair Market Determinations 

(b) Correction Amount 

(c) Costs of Correction 

(d) Distributions 

(e) De Minimis Exception 

Section 6. VFC Program Application and 

Self-Correction Component Procedures 

6.1 VFC Program Application Procedures 

6.2 VFC Program Self-Correction 

Component Procedures 

Section 7. Description of Eligible 

Transactions and Corrections Under the 

VFC Program 

7.1 Delinquent Remittance of Participant 

Funds 

(a) Delinquent Participant Contributions 

and Loan Repayments to Pension Plans 

Under VFC Program Applications 

(b) Delinquent Participant Contributions 

and Loan Repayments to Pension Plans 

Under the Self-Correction Component 

(c) Delinquent Participant Contributions to 

Insured Welfare Plans 

(d) Delinquent Participant Contributions to 

Welfare Plan Trusts 

7.2 Loans 

(a) Loan at Fair Market Interest Rate to a 

Party in Interest With Respect to the Plan 

(b) Loan at Below-Market Interest Rate to 

a Party in Interest With Respect to the 

Plan 

(c) Loan at Below-Market Interest Rate to 

a Person Who Is Not a Party in Interest 

With Respect to the Plan 

(d) Loan at Below-Market Interest Rate 

Solely Due to a Delay in Perfecting the 

Plan’s Security Interest 

7.3 Participant Loans 

(a) Loans Failing To Comply With Plan 

Provisions for Amount, Duration, or 

Level Amortization Under VFC Program 

Applications 

(b) Default Loans Under VFC Program 

Applications 

(c) Eligible Inadvertent Participant Loan 

Failures Under the Self-Correction 

Component 

7.4 Purchases, Sales and Exchanges 

(a) Purchase of an Asset (Including Real 

Property) by a Plan From a Party in 

Interest 

(b) Sale of an Asset (Including Real 

Property) by a Plan to a Party in Interest 

(c) Sale and Leaseback of Real Property to 

Employer 

(d) Purchase of an Asset (Including Real 

Property) by a Plan From a Person Who 

Is Not a Party in Interest With Respect 

to the Plan at a Price More Than Fair 

Market Value 

(e) Sale of an Asset (Including Real 

Property) by a Plan to a Person Who Is 

Not a Party in Interest With Respect to 

the Plan at a Price Less Than Fair Market 

Value 

(f) Holding of an Illiquid Asset Previously 

Purchased by a Plan 


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56See appendix A. 

57Section 506(b) provides that the Secretary of 

Labor shall have the responsibility and authority to 

detect and investigate and refer, where appropriate, 

civil and criminal violations related to the 

provisions of Title I of ERISA and other related 

Federal laws, including the detection, investigation, 

and appropriate referrals of related violations of 

Title 18 of the United States Code. 

58Section 3003(c) provides that, whenever the 

Secretary of Labor obtains information indicating 

that a party in interest or disqualified person is 

violating section 406 of ERISA, the Secretary of 

Labor shall transmit such information to the 

Secretary of the Treasury. 

59References herein to the Form 5500 include the 

Form 5500–SF as applicable. 

7.5 Benefits 

(a) Payment of Benefits Without Properly 

Valuing Plan Assets on Which Payment 

Is Based 

7.6 Plan Expenses 

(a) Duplicative, Excessive, or Unnecessary 

Compensation Paid by a Plan 

(b) Expenses Improperly Paid by a Plan 

(c) Payment of Dual Compensation to a 

Plan Fiduciary 

Appendix A. Sample VFC Program No 

Action Letter 

Appendix B. VFC Program Application 

Checklist (Required) 

Appendix C. List of EBSA Regional Offices 

Appendix D. Lost Earnings Example 

Appendix E. Model Application Form 

(Optional) 

Appendix F. SCC Retention Record Checklist 

(Required) 

Section 1. Purpose and Overview of the 

VFC Program 

The purpose of the Voluntary 

Fiduciary Correction Program (VFC 

Program or Program), including its SelfCorrection Component (SCC), is to 

protect the financial security of workers 

by encouraging identification and 

correction of transactions that violate or 

may violate Part 4 of Title I of the 

Employee Retirement Income Security 

Act of 1974, as amended (ERISA). Part 

4 of Title I of ERISA sets out the 

responsibilities of employee benefit 

plan fiduciaries. Section 409 of ERISA 

provides that a fiduciary who breaches 

any of these responsibilities shall be 

personally liable to make good to the 

plan any losses to the plan resulting 

from each breach and to restore to the 

plan any profits the fiduciary made 

through the use of the plan’s assets. 

Section 405 of ERISA provides that a 

fiduciary may be liable, under certain 

circumstances, for a breach of fiduciary 

responsibility by a co-fiduciary. In 

addition, under certain circumstances, 

there may be liability for knowing 

participation in a fiduciary breach. In 

order to assist all affected persons in 

understanding the requirements of 

ERISA and meeting their legal 

responsibilities, the Employee Benefits 

Security Administration (EBSA) is 

providing guidance on what constitutes 

adequate correction under Title I of 

ERISA for the Breaches described in this 

Program. 

Section 2. Effect of the VFC Program 

(a)(1) Effect of a no action letter. 

EBSA generally will issue to the 

applicant a no action letter 56 with 

respect to a Breach identified in the 

Program application if the eligibility 

requirements of section 4 are satisfied 

and a Plan Official corrects a Breach, as 

defined in section 3, in accordance with 

the requirements of sections 5, 6 and 7. 

Pursuant to the no action letter it issues, 

EBSA will not initiate a civil 

investigation under Title I of ERISA 

regarding the applicant’s responsibility 

for any transaction described in the no 

action letter, or assess civil penalties 

under either section 502(l) or 502(i) of 

ERISA on the correction amount paid to 

the plan or its participants. 

(2) Effect of correction under the SelfCorrection Component. EBSA will not 

issue a no action letter to a self-corrector 

under the Program’s SCC. A selfcorrector will receive an 

acknowledgment and summary of the 

SCC notice submission by email. If the 

self-corrector satisfies the eligibility 

requirements of section 4 and corrects a 

Breach, as defined in section 3, in 

accordance with the requirements of 

sections 5, 6 and 7, EBSA will not 

initiate a civil investigation under Title 

I of ERISA regarding the self-corrector’s 

responsibility for the Breach identified 

in the SCC notice or assess civil 

penalties under section 502(l) or 502(i) 

of ERISA on the correction amount paid 

to the plan or its participants. 

(b) Verification. EBSA reserves the 

right to conduct an investigation at any 

time to determine (1) the truthfulness 

and completeness of the factual 

statements set forth in the Program 

application or the SCC notice and (2) 

that the corrective action was, in fact, 

taken. 

(c) Limits on the effect of a no action 

letter under the VFC Program. (1) In 

general. Any no action letter issued 

under the VFC Program is limited to the 

Breach and applicants identified 

therein. Moreover, the method of 

calculating the correction amount 

described in this Program is only 

intended to correct the specific Breach 

described in the application. Methods of 

calculating losses other than, or in 

addition to, those set forth in the 

Program may be more appropriate, 

depending on the facts and 

circumstances, if the transaction 

violates provisions of ERISA other than 

those that can be corrected under the 

Program. If a transaction gave rise to 

Breaches not specifically described in 

the Program, the relief afforded by the 

Program would not extend to such 

additional Breaches. 

(2) No implied approval of other 

matters. A no action letter does not 

imply Departmental approval of matters 

not included therein, including steps 

that the fiduciaries take to prevent 

recurrence of the Breach described in 

the application and to ensure the plan’s 

future compliance with Title I of ERISA. 

(3) Material misrepresentation. Any 

no action letter issued under the VFC 

Program is conditioned on the 

truthfulness, completeness, and 

accuracy of the statements made in the 

application and of any subsequent oral 

and written statements or submissions. 

Any material misrepresentations or 

omissions will void the no action letter, 

retroactive to the date that the letter was 

issued by EBSA, with respect to the 

transaction that was materially 

misrepresented. 

(4) Applicant fails to satisfy terms of 

the VFC Program. If an application fails 

to satisfy the terms of the VFC Program, 

as determined by EBSA, EBSA reserves 

the right to investigate and take any 

other action with respect to the 

transaction and/or plan that is the 

subject of the application, including 

issuing a rejection letter. 

(5) Criminal investigations not 

precluded. Participation in the VFC 

Program will not preclude: 

(i) EBSA or any other governmental 

agency from conducting a criminal 

investigation of the transaction 

identified in the application; 

(ii) EBSA’s assistance to such other 

agency; or 

(iii) EBSA from making the 

appropriate referrals of criminal 

violations as required by section 506(b) 

of ERISA.57

(6) Other actions not precluded. 

Compliance with the terms of the VFC 

Program will not preclude EBSA from 

taking any of the following actions: 

(i) Seeking removal from positions of 

responsibility with respect to a plan or 

other non-monetary injunctive relief 

against any person responsible for the 

transaction at issue; 

(ii) Referring information regarding 

the transaction to the Internal Revenue 

Service as required by section 3003(c) of 

ERISA; 58 or 

(iii) Imposing civil penalties under 

section 502(c)(2) of ERISA based on the 

failure or refusal to file a timely, 

complete and accurate Annual Report 

Form 5500.59 Applicants should be 

aware that amended annual report 

filings may be required if possible 

Breaches of ERISA have been identified, 

or if action is taken to correct possible 


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60See supra note 54. 

61See section 4975(f)(5) of the Code; section 

141.4975–13 of the temporary Treasury Regulations 

and section 53.4941(e)–1(c) of the Treasury 

Regulations. The Federal tax treatment of a 

violation and correction under the VFC Program 

(including the Federal income and employment tax 

consequences to participants, beneficiaries, and 

plan sponsors) are determined under the Code. The 

IRS has indicated that, unless and until the 

Department of the Treasury and the IRS issue 

further guidance, except in those instances where 

the fiduciary breach or its correction involve a tax 

abuse, correction under the VFC Program for a 

breach that constitutes a prohibited transaction 

under section 4975 of the Code generally will be 

treated as correction for purposes of section 4975. 

Also, correction under the VFC Program for a 

breach for which there is a similar failure under the 

IRS’s EPCRS would generally be taken into account 

as correction under EPCRS. 

Breaches in accordance with the VFC 

Program. 

(7) Not binding on others. The 

issuance of a no action letter does not 

affect the ability of any other 

government agency, or any other person, 

to enforce any rights or carry out any 

authority they may have, with respect to 

matters described in the no action letter. 

(8) Example. A plan fiduciary causes 

the plan to purchase real estate from the 

plan sponsor under circumstances to 

which no prohibited transaction 

exemption applies. In connection with 

this transaction, the purchase causes the 

plan assets to be no longer diversified, 

in violation of ERISA section 

404(a)(1)(C). If the application reflects 

full compliance with the requirements 

of the Program, the Department’s no 

action letter would apply to the 

violation of ERISA section 406(a)(1)(A) 

but would not apply to the violation of 

section 404(a)(1)(C). 

(d) Limits on the effect of selfcorrection under the Self-Correction 

Component. (1) In general. Any relief 

afforded by a self-correction under the 

SCC is limited to the Breaches described 

in sections 7.1(b) and 7.3(c) of the 

Program and to the Plan Officials who 

complete the Penalty of Perjury 

Statement in accordance with section 

6.2(e) and (f) respectively. If a 

transaction gives rise to Breaches not 

specifically described in sections 7.1(b) 

and 7.3(c) of the Program, the relief 

afforded by the SCC will not extend to 

such additional Breaches. 

(2) Self-corrector fails to satisfy the 

terms of the Self-Correction Component. 

If a self-corrector fails to satisfy the 

terms of the SCC, as determined by 

EBSA, EBSA reserves the right to 

investigate and take any other action 

with respect to the transaction and/or 

plan that is the subject of the selfcorrection. 

(3) Criminal investigations not 

precluded. Participation in the SCC will 

not preclude: 

(i) EBSA or any other governmental 

agency from conducting a criminal 

investigation of the transactions 

identified in sections 7.1(b) and 7.3(c) of 

the Program; 

(ii) EBSA’s assistance to such other 

agency; or 

(iii) EBSA from making the 

appropriate referrals of criminal 

violations as required by section 506(b) 

of ERISA.60

(4) Other actions not precluded. 

Compliance with the terms of the SCC 

will not preclude EBSA from taking any 

of the following actions: 

(i) Seeking removal from positions of 

responsibility with respect to a plan or 

other non-monetary injunctive relief 

against any person responsible for the 

transaction at issue; or 

(ii) Imposing civil penalties under 

section 502(c)(2) of ERISA based on the 

failure or refusal to file a timely, 

complete and accurate Annual Report 

Form 5500. Self-correctors should be 

aware that amended annual report 

filings may be required if action is taken 

to correct a Breach in accordance with 

submitting an SCC notice. 

(5) Not binding on others. Compliance 

with the SCC does not affect the ability 

of any other government agency, or any 

other person, to enforce any rights or 

carry out any authority they may have 

regarding the Breach corrected under 

the SCC. 

Example. The plan sponsor withheld 

monies from employees’ paychecks, 

which were to be contributed, in part, 

to both a 401(k) plan and an insured 

health benefit plan. The plan sponsor 

did not remit the funds to either plan 

until four months after the Date of 

Withholding or Receipt. The plan 

sponsor corrects both Breaches and pays 

the appropriate Lost Earnings amount to 

each of the plans. The plan sponsor 

properly completes and submits an SCC 

notice to EBSA identifying the 

transaction involving the 401(k) plan. 

Assuming all conditions of the SCC 

have been met, relief under the Program 

is provided to the plan sponsor as the 

self-corrector for the delinquent 

participant contributions to the 401(k) 

plan, but not for the delinquent 

participant contributions to the insured 

health benefit plan. However, the plan 

sponsor may submit an application to 

correct the Breach involving the insured 

health benefit plan contributions under 

section 7.1(c) of the Program. 

(e) Correction. The correction criteria 

listed in the VFC Program represent 

EBSA enforcement policy with respect 

to both applications under the Program 

and use of the SCC, and are provided for 

informational purposes to the public, 

but are not intended to confer 

enforceable rights on any person who 

purports to correct a Breach. Applicants 

and self-correctors are advised that the 

term ‘‘correction’’ as used in the VFC 

Program is not necessarily the same as 

‘‘correction’’ pursuant to section 4975 of 

the Internal Revenue Code (Code).61

Correction may not be achieved under 

the Program by engaging in a prohibited 

transaction that is not subject to a 

prohibited transaction administrative 

exemption. 

(f) EBSA’s authority to investigate. 

EBSA reserves the right to conduct an 

investigation and take any other 

enforcement action relating to the 

transaction identified in a VFC Program 

application or SCC notice in certain 

circumstances, such as prejudice to the 

Department that may be caused by the 

expiration of the statute of limitations 

period, material misrepresentations or 

omissions, other abuses of the VFC 

Program, or significant harm to the plan 

or its participants that is not cured by 

the correction provided under the VFC 

Program. EBSA may also conduct a civil 

investigation and take any other 

enforcement action relating to matters 

not covered by the VFC Program 

application or SCC notice, or relating to 

other plans sponsored by the same plan 

sponsor, while a VFC Program 

application involving the plan or the 

plan sponsor is pending. 

(g) Confidentiality. EBSA will 

maintain the confidentiality of any 

documents submitted under the VFC 

Program, to the extent permitted by law. 

However, as noted in paragraphs (c)(5) 

and (6) and (d)(3) and (4) of this section, 

EBSA has an obligation to make 

referrals to the Internal Revenue Service 

(IRS) and to refer to other agencies 

evidence of criminality and other 

information for law enforcement 

purposes. 

Section 3. Definitions 

(a) The terms used in this document 

have the same meaning as provided in 

section 3 of ERISA, 29 U.S.C. 1002, 

unless separately defined herein. 

(b) The following definitions apply for 

purposes of the VFC Program: 

(1) Breach. The term ‘‘Breach’’ means 

any transaction that is or may be a 

violation of the fiduciary responsibility 

provisions contained in Part 4 of Title 

I of ERISA. 

(2) Plan Official. The term ‘‘Plan 

Official’’ means a plan fiduciary, plan 

sponsor, party in interest with respect to 

a plan, or other person who is in a 

position to correct a Breach by filing an 


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application or submitting a SCC notice 

in accordance with the VFC Program’s 

requirements. 

(3) Under Investigation. For purposes 

of section 4(a), a plan, potential 

applicant, or self-corrector shall be 

considered to be ‘‘Under Investigation’’ 

if any investigation, review or 

examination described in (i), (ii), (iii), 

(iv), or (v) of this section 3 exists, and 

the plan, a Plan Official, or any 

authorized plan representative has 

received a written or oral notice of the 

investigation, review or examination. 

(i) EBSA is conducting an 

investigation or review of the plan; 

(ii) EBSA is conducting an 

investigation of the potential applicant, 

self-corrector, or plan sponsor in 

connection with an act or transaction 

directly related to the plan; 

(iii) any governmental agency is 

conducting a criminal investigation of 

the plan, or of the potential applicant, 

self-corrector, or plan sponsor in 

connection with an act or transaction 

directly related to the plan; 

(iv) the IRS is conducting an 

Employee Plans examination of the 

plan; or 

(v) Other than investigations 

identified in sections 3(b)(3)(i), (ii), (iii), 

or (iv), the Pension Benefit Guaranty 

Corporation (PBGC), any state attorney 

general, any federal governmental 

agency, or any state insurance 

commissioner is conducting an 

investigation or examination of the plan, 

or of the applicant, self-corrector, or 

plan sponsor in connection with an act 

or transaction directly related to the 

plan, unless in the case of a VFC 

Program application, the applicant 

notifies EBSA, in writing, of such an 

investigation or examination at the time 

of the application. 

An applicant notifying EBSA of an 

investigation or examination under 

section 3(b)(3)(v) must submit the name 

of the examining agency and a contact 

person at such agency. Upon receipt of 

an application including such 

information, EBSA will promptly notify 

the investigating agency in writing of 

the VFC Program application. EBSA’s 

notice will afford the examining agency 

an opportunity to provide EBSA with 

information relevant to the investigation 

or examination. In response to the 

information received from the 

investigating agency, EBSA, in its sole 

discretion, may decline to issue a no 

action letter to the applicant. 

For purposes of section 4(a), a plan 

shall not be considered to be ‘‘Under 

Investigation’’ merely because EBSA 

staff has contacted the plan, the 

applicant, the self-corrector, or the plan 

sponsor in connection with a 

participant complaint, unless the 

participant complaint concerns the 

transaction described in the application 

or identified in the SCC notice and the 

plan has not received the correction 

amount due under the Program as of the 

date EBSA staff contacted the plan, the 

applicant, the self-corrector, or the plan 

sponsor. A plan also is not considered 

to be ‘‘Under Investigation’’ if the 

accountant of the plan is undergoing a 

work paper review based on such 

accountant’s audit of the plan by 

EBSA’s Office of the Chief Accountant 

under the authority of ERISA section 

504(a). 

Example 1. On March 1, the plan 

sponsor of a multiple employer welfare 

arrangement (MEWA) received written 

notification from an agent of the state 

insurance commissioner’s office that the 

MEWA has been scheduled for 

examination. The applicant does not 

notify EBSA of the examination. As of 

March 1, the plan is ineligible for 

participation in the VFC Program 

because the plan sponsor has received a 

notice from the state insurance 

commissioner’s office concerning its 

intent to examine the plan, and the 

applicant did not provide EBSA written 

notice of the examination with the 

application. 

Example 2. Assume the same facts as 

in Example 1, except that the applicant 

chooses to notify EBSA in writing of the 

examination. The plan’s eligibility to 

apply under the VFC Program would 

not be affected because the applicant 

provides written notice of the 

examination to EBSA with the 

application. EBSA will promptly notify 

the state insurance commissioner of the 

pending VFC Program application so 

that the state insurance commissioner’s 

office has an opportunity to provide 

information about its examination to 

EBSA. EBSA will include the 

information received from the state 

insurance commissioner’s office in its 

review of the VFC Program application. 

Section 4. VFC Program Eligibility 

Eligibility for the VFC Program is 

conditioned on the following: 

(a) Except as provided in paragraphs 

(d) or (e) of this section 4, the plan, the 

applicant, or the self-corrector is not 

Under Investigation. 

(b)(1) In general. The Program 

application contains no evidence of 

potential criminal violations as 

determined by EBSA. 

(2) Exception for VFC Program 

applications correcting transactions 

described in Section 7.1(a). 

Participation in the VFC Program to 

correct delinquent participant 

contributions and loan repayments is 

permitted in cases where there is 

evidence of potential criminal violation 

by parties other than the plan 

administrator, the plan sponsor or the 

applicant provided: 

(i) All funds have been repaid to the 

plan; 

(ii) The appropriate law enforcement 

agency has been notified of the potential 

criminal violation; and 

(iii) The applicant submits to the 

appropriate EBSA office a statement (A) 

providing contact information for the 

law enforcement agency that has been 

notified of the alleged criminal activity; 

(B) asserting that the applicant was not 

involved in the potential criminal 

violation; and (C) stating whether a 

claim relating to the criminal activity 

has been made under an ERISA section 

412 fidelity bond. 

Example. The bookkeeper of the plan 

sponsor of a 401(k) plan allegedly 

embezzled funds from the plan sponsor, 

including amounts which had been 

withheld from employees’ paychecks 

but not yet forwarded to the plan. As a 

result of the embezzlement, participant 

contributions were remitted to the plan 

two months later than the plan 

sponsor’s usual practice. The owner of 

the company sponsoring the plan was 

not involved in the embezzlement and 

notified local law enforcement of the 

embezzlement. This owner is eligible to 

submit an application for relief under 

the VFC Program despite the potential 

criminal violation if the requirements 

under section 4(b)(2) are met. Note that 

the owner is not eligible for relief under 

the SCC because the exception under 

section 4(b)(2) is only available under 

the VFC Program application process 

and not the SCC. 

(c) EBSA has not conducted an 

investigation which resulted in written 

notice to a plan fiduciary that the 

transaction, for which the potential 

applicant or self-corrector could 

otherwise have sought relief under the 

Program, has been referred to the IRS. 

This condition applies only to those 

transactions specifically identified in 

EBSA’s written notice of referral to the 

IRS. 

(d) Exception for Bulk VFC Program 

Applicants. An applicant is eligible to 

submit a bulk application under the 

VFC Program, even if one or more of the 

plans named in the application (‘‘named 

plans’’) is Under Investigation, and to 

receive a no action letter covering each 

of the named plans provided: (1) the 

applicant is a service provider that is 

seeking the relief afforded by the 

Program only on its own behalf; (2) the 

applicant was providing services to each 

of the named plans at the time of the 

transaction being corrected; (3) the 


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application includes at least ten named 

plans; (4) all named plans participated 

in the transaction being corrected; and 

(5) the corrective action was not taken 

as a result of an investigation of any 

named plan. A determination by EBSA 

that the corrective action was taken as 

a result of an investigation of any named 

plan results in the no action letter 

specifically excluding such plan. 

Example. A bank provides investment 

management services to pension plans. 

As part of these services, it bought 

bonds on behalf of its plan clients 

directly from a broker dealer’s 

inventory. The bank independently 

discovered that the broker dealer is an 

affiliate of the bank and consequently, a 

party in interest to the plans (PII). No 

available class exemption permitted 

these purchases. The bank’s review 

showed it had bought bonds for thirtythree (33) of its plan clients from the PII 

broker dealer. The bank, as a service 

provider to the plans, may submit a bulk 

application correcting the transaction in 

compliance with section 7.4(a) of the 

Program provided the application 

names all 33 plans that participated in 

the transaction and the bank is seeking 

relief only on its own behalf under the 

Program. Assuming the applicant has 

complied with the terms of the VFC 

Program, EBSA will issue a no action 

letter to the service provider, which 

includes the name of each of the 

participating plans. 

(e) Exception for Eligible Inadvertent 

Participant Loan Failures. A selfcorrector is eligible to correct an Eligible 

Inadvertent Participant Loan Failure 

under the VFC Program section 7.3(c) 

even if the plan or the self-corrector is 

Under Investigation provided the failure 

is eligible for self-correction under the 

IRS’s EPCRS. 

Section 5. General Rules for Acceptable 

Corrections 

(a) Fair Market Determinations. Many 

corrections require that the current or 

fair market value (FMV) of an asset be 

determined as of a particular date, 

usually either the date the plan 

originally acquired the asset or the date 

of the correction, or both. In order to be 

acceptable as part of a VFC Program 

correction, the valuation must meet the 

conditions in (1) through (4) below. 

Other corrections require that a fair 

market interest rate be determined as of 

a particular date, usually the date the 

loan was made. In order to be acceptable 

as part of a VFC Program correction, this 

determination must be made by an 

independent commercial lender, which 

meets the conditions in (5) below: 

(1) If there is a generally recognized 

market for the property (e.g., the New 

York Stock Exchange), the FMV of the 

asset is the average value of the asset on 

such market on the applicable date, 

unless the plan document specifies 

another objectively determined value 

(e.g., the closing price). 

(2) If there is no generally recognized 

market for the asset, the FMV of that 

asset must be determined in accordance 

with generally accepted appraisal 

standards by a qualified, independent 

appraiser and reflected in a written 

appraisal report signed by the appraiser. 

(3) An appraiser is ‘‘qualified’’ if the 

appraiser has met the education, 

experience, and licensing requirements 

that are generally recognized for 

appraisal of the type of asset being 

appraised. 

(4) An appraiser is ‘‘independent’’ if 

the appraiser is not one of the following, 

does not own or control any of the 

following, and is not owned or 

controlled by, or affiliated with, any of 

the following: 

(i) The prior owner of the asset, if the 

asset was purchased by the plan; 

(ii) The purchaser of the asset, if the 

asset was, or is now being, sold by the 

plan; 

(iii) Any other owner of the asset, if 

the plan is not the sole owner; 

(iv) A fiduciary of the plan (except to 

the extent the appraiser becomes a 

fiduciary when retained to perform this 

appraisal for the plan); 

(v) A party in interest with respect to 

the plan (except to the extent the 

appraiser becomes a party in interest 

when retained to perform this appraisal 

for the plan); or 

(vi) The VFC Program applicant. 

(5) A commercial lender is 

‘‘independent’’ if it is not one of the 

following, does not own or control any 

of the following, and is not owned or 

controlled by, or affiliated with any of 

the following: 

(i) A person or entity who was 

involved in securing or maintaining the 

loan, or in determining or modifying the 

terms of the loan at any time during the 

life of the loan; 

(ii) A fiduciary of the plan (except to 

the extent the commercial lender 

becomes a fiduciary when retained to 

provide this service for the plan); 

(iii) A party in interest with respect to 

the plan (except to the extent the 

commercial lender becomes a party in 

interest when retained to provide this 

service for the plan); or 

(iv) The VFC Program applicant. 

(b) Correction Amount. (1) In general. 

For purposes of the VFC Program, the 

correction amount is the amount that 

must be paid to the plan as a result of 

the Breach in order to make the plan 

whole. In most instances, the correction 

amount will be a combination of the 

Principal Amount involved in the 

transaction (see paragraph (b)(2) of this 

section), the Lost Earnings amount, 

which is earnings that would have been 

earned on the Principal Amount for the 

period of the transaction (see paragraph 

(b)(6) of this section, and also see 

paragraph (b)(3) of this section for a 

special rule for Loss Date under the 

SCC), and any interest on Lost Earnings. 

However, in circumstances when the 

Restoration of Profits amount (see 

paragraph (b)(7) of this section) exceeds 

the Lost Earnings amount and any 

interest on Lost Earnings, the correction 

amount will be a combination of the 

Principal Amount and the Restoration of 

Profits amount. The responsible 

fiduciary, plan sponsor or other Plan 

Official, must pay the correction amount 

and any costs of correction. No part of 

the correction amount or costs of 

correction can be paid from plan assets, 

including charges against participant 

accounts or plan forfeiture accounts. 

(2) Principal Amount. ‘‘Principal 

Amount’’ is the amount that would have 

been available to the plan for 

investment or distribution on the date of 

the Breach, had the Breach not 

occurred. The Principal Amount, when 

applicable, must be determined for each 

transaction by reference to section 7 of 

the VFC Program. Generally, the 

Principal Amount is the base amount on 

which Lost Earnings and, if applicable, 

Restoration of Profits is calculated. The 

Principal Amount shall include any 

transaction costs associated with 

entering into the transaction that 

constitutes the Breach, which were paid 

by the plan. 

(3) Loss Date. (i) In general ‘‘Loss 

Date’’ is the date that the plan lost the 

use of the Principal Amount. 

(ii) Special rule for delinquent 

participant contributions and loan 

repayments under the SCC section 

7.1(b). ‘‘Loss Date’’ is the Date of 

Withholding or Receipt. 

(4) Date of Withholding or Receipt. 

‘‘Date of Withholding or Receipt’’ is the 

date the amount would otherwise have 

been payable to the participant in cash 

in the case of amounts withheld by an 

employer from a participant’s wages, or 

the day on which the participant 

contribution or loan payment is 

received by the employer in the case of 

amounts that a participant or 

beneficiary pays to an employer. Date of 

Withholding or Receipt is not the same 

date as the date on which contributions 

or loan repayments could reasonably 

have been segregated from the employer 

general assets. 

Example 1. An employer pays its 

employees’ wages on the 1st and the 


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62These underpayment rates are displayed on 

EBSA’s website and will be updated when 

necessary. 

63Rev. Proc. 95–17, 1995–1 C.B. 556 (Feb. 8, 

1995). These factors, which are displayed on 

EBSA’s website in a tabular format, incorporate 

daily compounding of an interest rate over a set 

period of time. 

64These underpayment rates are displayed on 

EBSA’s website and will be updated when 

necessary. 

15th of each month. Participant 

contributions to a pension plan are 

withheld from employees’ wages on 

these dates. The employer determined 

that it could reasonably take two 

business days to segregate these 

withholdings from its general assets for 

transmittal to the plan. The ‘‘Date of 

Withholding or Receipt’’ is the 1st and 

15th of each month. For purposes of a 

Program application to correct 

delinquent participant contributions, 

without taking into account any nonbusiness days, the ‘‘Loss Date’’ would be 

the 3rd and 17th of each month. 

Example 2. Assuming the same facts 

as Example 1, except the delinquent 

participant contributions are being 

corrected using the SCC. The ‘‘Date of 

Withholding or Receipt’’ is the 1st and 

15th of each month. For purposes of 

using the SCC to correct delinquent 

participant contributions, the ‘‘Loss 

Date’’ would be the 1st and 15th of each 

month. 

(5) Recovery Date. ‘‘Recovery Date’’ is 

the date that the Principal Amount is 

restored to the plan. 

(6) Lost Earnings. (i) General. ‘‘Lost 

Earnings’’ is intended to approximate 

the amount that would have been 

earned by the plan on the Principal 

Amount, but for the Breach. For 

purposes of this Program, Lost Earnings 

shall be calculated in accordance with 

this paragraph. 

(ii) Initial Calculation. Lost Earnings 

shall be calculated by: (A) determining 

the applicable corporate underpayment 

rate(s) established under section 

6621(a)(2) of the Code 62 for each quarter 

(or portion thereof) for the period 

beginning with the Loss Date and 

ending with the Recovery Date; (B) 

determining, by reference to IRS 

Revenue Procedure 95–17,63 the 

applicable factor(s) for such quarterly 

underpayment rate(s) for each quarter 

(or portion thereof) of the period 

beginning with the Loss Date and 

ending with the Recovery Date; and (C) 

multiplying the Principal Amount by 

the first applicable factor to determine 

the amount of earnings for the first 

quarter (or portion thereof). If the Loss 

Date and Recovery Date are within the 

same quarter, the initial calculation is 

complete. If the Recovery Date is not in 

the same quarter as the Loss Date, the 

applicable factor for each subsequent 

quarter (or portion thereof) must be 

applied to the sum of the Principal 

Amount and all earnings as of the end 

of the immediately preceding quarter (or 

portion thereof), until Lost Earnings 

have been calculated for the entire 

period, ending with the Recovery Date. 

(iii) Payment of Lost Earnings after 

Recovery Date. If Lost Earnings are not 

paid to the plan on the Recovery Date 

along with the Principal Amount, 

payment of Lost Earnings shall include 

interest on the amount of Lost Earnings. 

Such interest shall be calculated in the 

same manner as Lost Earnings described 

in paragraph (b)(6)(ii) above, for the 

period beginning on the Recovery Date 

and ending on the date the Lost 

Earnings are paid to the plan. 

(iv) Special Rule for Transactions 

Causing Large Losses. If the amount of 

Lost Earnings (determined in 

accordance with paragraph (b)(6)(ii) 

above) and any interest added to such 

Lost Earnings (determined in 

accordance with paragraph (b)(6)(iii) 

above), exceed $100,000, the amount of 

Lost Earnings and interest, if any, to be 

paid to the plan shall be determined in 

accordance with paragraphs (b)(6)(ii) 

and (iii) above, substituting the 

applicable underpayment rates under 

section 6621(c)(1) of the Code 64 in lieu 

of the rates under section 6621(a)(2). 

(v) Method of Calculation for VFC 

Program Applications. For purposes of 

calculating Lost Earnings and interest, if 

any, a Plan Official may either (A) use 

the Online Calculator described in 

paragraph (b)(8) below, or (B) perform a 

manual calculation in accordance with 

subparagraphs (i) through (iv) of this 

paragraph (b)(6). A Plan Official using 

the Online Calculator or performing a 

manual calculation shall include as part 

of the VFC Program application 

sufficient information to verify the 

correctness of the amounts to be paid to 

the plan. 

(vi) Method of Calculation under the 

SCC. For purposes of calculating Lost 

Earnings and interest, if any, the selfcorrector must use the Online Calculator 

described in paragraph (b)(8) below. 

(7) Restoration of Profits. (i) General. 

If the Principal Amount was used for a 

specific purpose such that a profit on 

the use of the Principal Amount is 

determinable, the Plan Official must 

calculate the Restoration of Profits 

amount and compare it to the Lost 

Earnings amount to determine the 

correction amount (see paragraph (b)(1) 

of this section). If the Restoration of 

Profits amount exceeds Lost Earnings 

and interest, if any, the Restoration of 

Profits amount must be paid to the plan 

instead of Lost Earnings. ‘‘Restoration of 

Profits’’ is a combination of two 

amounts: (A) the amount of profit made 

on the use of the Principal Amount by 

the fiduciary or party in interest who 

engaged in the Breach, or by a person 

who knowingly participated in the 

Breach, and (B) if the profit is returned 

to the plan on a date later than the date 

on which the profit was realized (i.e., 

received or determined), the amount of 

interest earned on such profit from the 

date the profit was realized to the date 

on which the profit is paid to the plan. 

The amount of such interest shall be 

determined in accordance with 

paragraph (b)(7)(ii) below. 

(ii) Calculation of Interest. Interest 

shall be calculated by: (A) determining 

the applicable corporate underpayment 

rate(s) established under section 

6621(a)(2) of the Code for each quarter 

(or portion thereof) for the period 

beginning with the date the profit was 

realized (i.e. received or determined) 

and ending with the date on which the 

profit is paid to the plan; (B) 

determining, by reference to IRS 

Revenue Procedure 95–17, the 

applicable factor(s) for such quarterly 

underpayment rate(s) for each quarter 

(or portion thereof) of the period 

beginning with the date the profit was 

realized and ending with the date on 

which the profit is paid to the plan; and 

(C) multiplying the first applicable 

factor by the profit on the Principal 

Amount, referred to in paragraph 

(b)(7)(i)(A) above, to determine the 

amount of interest for the first quarter 

(or portion thereof). If the date the profit 

was realized and the date the profit is 

paid to the plan are within the same 

quarter, the initial calculation is 

complete. If the date the profit was 

realized is not in the same quarter as the 

date the profit was paid to the plan, the 

applicable factor for each subsequent 

quarter (or portion thereof) must be 

applied to the sum of the profit on the 

Principal Amount, referred to in 

paragraph (b)(7)(i)(A) above, and all 

interest as of the end of the immediately 

preceding quarter (or portion thereof), 

until interest has been calculated for the 

entire period, ending with the date the 

profit is paid to the plan. 

(iii) Special Rule for Transactions 

Resulting in Large Restorations. If the 

amount of Restoration of Profits 

(determined in accordance with 

paragraph (b)(7)(i) above) exceeds 

$100,000, the amount of any interest on 

the Restoration of Profits to be paid to 

the plan shall be determined in 

accordance with paragraph (b)(7)(ii) 

above, substituting the applicable 

underpayment rates under section 


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4214 Federal Register / Vol. 90, No. 9 / Wednesday, January 15, 2025 / Rules and Regulations 

6621(c)(1) of the Code in lieu of the 

rates under section 6621(a)(2). 

(iv) Method of Calculation for VFC 

Program Applications. For purposes of 

calculating the interest amount for 

Restoration of Profits, pursuant to 

paragraphs (b)(7)(ii) and (iii) above, a 

Plan Official may either (A) use the 

Online Calculator described in 

paragraph (b)(8) below, or (B) perform a 

manual calculation in accordance with 

subparagraphs (ii) and (iii) of this 

paragraph (b)(7). A Plan Official using 

the Online Calculator or performing a 

manual calculation shall include as part 

of the VFC Program application 

sufficient information to verify the 

correctness of the amounts to be paid to 

the plan. 

(8) Online Calculator. ‘‘Online 

Calculator’’ is an internet based 

compliance assistance tool provided on 

EBSA’s website that permits applicants 

and self-correctors to calculate the 

amount of Lost Earnings, any interest on 

Lost Earnings, and the interest amount 

for Restoration of Profits, if applicable, 

for certain transactions. The Online 

Calculator will be updated as necessary. 

(i) Lost Earnings and Interest. To 

calculate Lost Earnings, applicants or 

self-correctors must input the (A) 

Principal Amount, (B) Loss Date, (C) 

Recovery Date, and, if the final payment 

will occur after the Recovery Date, (D) 

the date of such final payment. The 

Online Calculator selects the applicable 

factors under Revenue Procedure 95–17 

after referencing the underpayment rates 

over the relevant time period. The 

Online Calculator then automatically 

applies the factors to provide applicants 

and self-correctors with the amount of 

Lost Earnings and interest, if any, that 

must be paid to the plan. 

(ii) Interest Amount for Restoration of 

Profits. To calculate the interest amount 

on the profit, applicants must input (A) 

the amount of profit, (B) the date the 

amount of profit was realized (i.e. 

received or determined), and (C) the 

date of payment of the Restoration of 

Profits amount. The Online Calculator 

selects the applicable factors under 

Revenue Procedure 95–17 after 

referencing the underpayment rates over 

the relevant time period. The Online 

Calculator then automatically applies 

the factors to provide applicants with 

the interest amount on the profit that 

must be paid to the plan. 

(9) The principles of paragraph (b) of 

this section are illustrated by example 

in Appendix D. 

(c) Costs of Correction. (1) The 

fiduciary, plan sponsor or other Plan 

Official, must pay the correction amount 

and costs of correction. The costs of 

correction cannot be paid from plan 

assets, including charges against 

participant accounts or plan forfeiture 

accounts. 

(2) The correction amount and the 

costs of correction include, where 

appropriate, the Principal Amount and 

Lost Earnings and such expenses of 

correction as closing costs, prepayment 

penalties, or sale or purchase costs 

associated with correcting the 

transaction. 

(3) The principle of paragraph (c)(1) of 

this section is illustrated in the 

following example and in paragraph (d) 

below: 

Example. The plan fiduciaries did not 

obtain a required independent appraisal 

in connection with a transaction 

described in section 7. In connection 

with correcting the transaction, the plan 

fiduciaries now propose to have the 

appraisal performed as of the date of 

purchase. The plan document permits 

the plan to pay reasonable and 

necessary expenses; the fiduciaries have 

objectively determined that the cost of 

the proposed appraisal is reasonable 

and is not more expensive than the cost 

of an appraisal contemporaneous with 

the purchase. The plan may therefore 

pay for this appraisal. However, the 

plan may not pay any costs associated 

with recalculating participant account 

balances to take into account the new 

valuation. There would be no need for 

these additional calculations or any 

increased appraisal cost if the plan’s 

assets had been valued properly at the 

time of the purchase. Therefore, the cost 

of recalculating the plan participants’ 

account balances is not a reasonable 

plan expense but is part of the costs of 

correction. 

(d) Distributions. Plans will have to 

make supplemental distributions to 

former employees, beneficiaries 

receiving benefits, or alternate payees, if 

the original distributions were too low 

because of the Breach. In these 

situations, the Plan Official or plan 

administrator must determine who 

received distributions from the plan 

during the time period affected by the 

Breach, recalculate the account 

balances, and determine the amount of 

the underpayment to each affected 

individual. The applicant must 

demonstrate proof of payment to 

participants and beneficiaries whose 

current location is known to the plan 

and/or applicant. For individuals whose 

location is unknown, applicants must 

demonstrate that they have segregated 

adequate funds to pay the missing 

individuals and that the applicant has 

commenced the process of locating the 

missing individuals using methods 

involving nominal expense such as 

certified mail and electronic search 

technologies as well as checking related 

plan records and with any designated 

plan beneficiary. If these methods are 

unsuccessful, the applicant should 

consider the use of commercial locator 

services, credit reporting agencies, 

information brokers and investigation 

databases as well as analogous computer 

services depending on the amount of 

underpayment in relation to the cost of 

the services. The costs of such efforts 

are part of the costs of correction. See 

Missing Participants—Best Practices for 

Pension Plans (available at 

www.dol.gov/agencies/ebsa/employersand-advisers/plan-administration-andcompliance/retirement/missingparticipants-guidance) for more 

information on fiduciary best practices 

that based on EBSA’s experience 

working with plans have proven 

effective at minimizing and mitigating 

the problem of missing or 

nonresponsive participants. 

(e) De Minimis Exception. Where 

correction under the Program requires 

distributions in amounts less than $35 

to former employees, their beneficiaries 

and alternate payees, who neither have 

account balances with, nor have a right 

to future benefits from the plan, and the 

applicant demonstrates in its 

submission that the cost of making the 

distribution to each such individual 

exceeds the amount of the payment to 

which such individual is entitled in 

connection with the correction of the 

transaction that is the subject of the 

application, the applicant need not 

make distributions to such individuals 

who would receive less than $35 each 

as part of the correction. However, the 

applicant must pay to the plan as a 

whole the total of such de minimis 

amounts not distributed to such 

individuals. 

Example. Employer X sponsors Plan 

Y. Employer X submits an application 

under the VFC Program to correct a 

failure to timely forward participant 

contributions to Plan Y. Employer X had 

paid the delinquent contributions six 

months late but had not paid Lost 

Earnings on the delinquency. The 

correction under the VFC Program, 

therefore, required only payment of Lost 

Earnings for the six-month delinquency. 

During the six-month period 25 

employees separated from service and 

rolled over their plan accounts to 

individual retirement accounts. The 

amount of Lost Earnings due to 20 of 

those former employees is less than $35, 

and Employer X demonstrates that the 

cost of making the distribution to those 

former employees is $42 per individual. 

Employer X need not make distributions 

to those 20 former employees. However, 

the total amount of distributions that 


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65For example, the Department has taken the 

position that where a plan document is silent as to 

the payment of reasonable administrative expenses, 

the plan may pay reasonable administrative 

expenses. Where a plan document provides that the 

employer will pay any such expenses, and if the 

employer has reserved the right to amend the plan 

document, ERISA would not prevent the employer 

from amending the plan to require, prospectively, 

that the relevant expenses be paid by the plan. The 

Department does not believe that ERISA would 

permit a fiduciary to implement a plan amendment 

that attempted to retroactively relieve the employer 

of an obligation to pay plan expenses. 

66Applicants must supply complete copies of the 

plan documents and other pertinent documents if 

requested by EBSA during its review of the 

application. 

would have been due to those former 

employees must be paid to Plan Y. The 

payment to Plan Y may be used for any 

purpose that payments or credits, which 

are not allocated directly to participant 

accounts, are used.65 Employer X must 

make distributions to the five former 

employees who are entitled to receive 

distributions of more than $35. 

Section 6. VFC Program Application 

and Self-Correction Component 

Procedures 

6.1 VFC Program Application 

Procedures 

(a) In general. Each application must 

adhere to the requirements set forth 

below. Failure to do so may render the 

application invalid. 

(b) Applicant. The application must 

be prepared by a Plan Official or an 

authorized representative (e.g., attorney, 

accountant, or other service provider). If 

a representative of the Plan Official is 

submitting the application, the 

application must include a statement 

signed by the Plan Official that the 

representative is authorized to represent 

the Plan Official. Any fees paid to such 

representative for services relating to the 

preparation and submission of the 

application may not be paid from plan 

assets, including charges to participants 

accounts or plan forfeiture accounts. 

(c) Contact person. Each application 

must include the name, address (street 

and email) and telephone number of a 

contact person. The contact person must 

be familiar with the contents of the 

application and have authority to 

respond to inquiries from EBSA. 

(d) Detailed narrative. The applicant 

must provide to EBSA a detailed 

narrative describing the Breach and the 

corrective action. The narrative must 

include: 

(1) A list of all persons materially 

involved in the Breach and its 

correction (e.g., fiduciaries, service 

providers, borrowers); 

(2) The plan sponsor’s nine-digit 

number (EIN), plan number, and 

address of the plan sponsor and 

administrator; 

(3) The date the plan’s most recent 

Form 5500 was filed; or, in the case of 

a bulk VFC Program application, for 

each plan named in the application, 

either the date the most recent Form 

5500 was filed or the plan sponsor’s 

nine-digit number (EIN); 

(4) An explanation of the Breach, 

including the date it occurred; 

(5) An explanation of how the Breach 

was corrected, by whom and when; and 

(6)(i) If the applicant performs a 

manual calculation in accordance with 

paragraphs (b)(6)(i) through (iv) of 

section 5 or paragraphs (b)(7)(i) through 

(iii), specific calculations demonstrating 

how Principal Amount and Lost 

Earnings or, if applicable, Restoration of 

Profits were computed; 

(ii) If the applicant uses the Online 

Calculator in accordance with paragraph 

(b)(8) of section 5, the data elements 

required to be input into the Online 

Calculator under paragraphs (b)(8)(i) 

and/or (ii) of section 5, as applicable (to 

satisfy this requirement, applicants may 

submit a copy of the page(s) that results 

from the ‘‘View Printable Results’’ 

function used after inputting data 

elements and completing use of the 

Online Calculator); and 

(iii) An explanation of why payment 

of Lost Earnings or Restoration of Profits 

was chosen to correct the Breach. 

(e) Supporting documentation. The 

applicant must also include: 

(1) Copies of the relevant portions of 

the plan document and any other 

pertinent documents (such as the 

adoption agreement, trust agreement, or 

insurance contract); 66

(2) Documentation that supports the 

narrative description of the transaction 

and its correction; 

(3) Documentation establishing the 

Lost Earnings amount; 

(4) Documentation establishing the 

amount of Restoration of Profits, if 

applicable; 

(5) All documents described in 

section 7 with respect to the transaction 

involved; and 

(6) Proof of payment of Principal 

Amount and Lost Earnings or 

Restoration of Profits. 

Applicants using the Online 

Calculator may satisfy the requirements 

of paragraph (e)(3) above, with respect 

to Lost Earnings, and paragraph (e)(4) 

above, as to the amount of interest, if 

any, payable with respect to the profit 

amount, by complying with the 

requirements of paragraph (d)(6)(ii) of 

this section. Except for proof of 

payment, as described in paragraph 

(e)(6) above, applicants correcting 

participant loan transactions in section 

7.3(a) and (b) are not required to submit 

the other documentation described 

above unless requested by EBSA. 

(f) Examples of supporting 

documentation. (1) Examples of 

documentation supporting the 

description of the transaction and 

correction are leases, appraisals, notes 

and loan documents, service provider 

contracts, invoices, settlement 

documents, deeds, perfected security 

interests, and amended annual reports. 

(2) Examples of acceptable proof of 

payment include copies of canceled 

checks, executed wire transfers, a 

signed, dated receipt from the recipient 

of funds transferred to the plan (such as 

a financial institution), and bank 

statements for the plan’s account. 

(g) Penalty of Perjury Statement. Each 

application must include the following 

statement: ‘‘Under penalties of perjury I 

certify that I am not Under Investigation 

(as defined in section 3(b)(3) of the VFC 

Program) and that I have reviewed this 

application, including all supporting 

documentation, and to the best of my 

knowledge and belief the contents are 

true, correct, and complete.’’ 

(1) Applicants in general. The Penalty 

of Perjury Statement must be signed and 

dated by a plan fiduciary with 

knowledge of the transaction that is the 

subject of the application and the 

authorized representative of the 

applicant, if any. In addition, each Plan 

Official applying under the VFC 

Program must sign and date the Penalty 

of Perjury Statement. The statement 

must accompany the application and 

any subsequent additions to the 

application. Use of the Penalty of 

Perjury Statement included with the 

Model Application Form in Appendix E 

will satisfy the requirements of 

paragraph (g) of this section. 

(2) Bulk Applicants. The Penalty of 

Perjury Statement must be signed and 

dated by the bulk applicant with 

knowledge of the transaction that is the 

subject of the application and the 

authorized representative of the bulk 

applicant, if any. The statement must 

accompany the application and any 

subsequent additions to the application. 

Use of the Penalty of Perjury Statement 

included with the Model Application 

Form in Appendix E will satisfy the 

requirements of paragraph (g) of this 

section. 

(3) Contributing or Adopting 

Employers in Multiemployer Plans or 

Multiple Employer Plans. In the case of 

an employer that contributes to or has 

adopted a multiemployer plan or 

multiple employer plan and wishes to 

correct a Breach, the Penalty of Perjury 

Statement may be signed and dated by 


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4216 Federal Register / Vol. 90, No. 9 / Wednesday, January 15, 2025 / Rules and Regulations 

67The online VFC Program web tool will be 

located on EBSA’s website. 

the employer and, regardless of the 

employer’s status as a plan fiduciary, 

the Penalty of Perjury Statement need 

not be signed by another plan fiduciary. 

(h) Checklist. The checklist in 

Appendix B must be completed, signed, 

dated and submitted with the 

application. Use of the checklist 

included with the Model Application 

Form in Appendix E also will satisfy the 

requirements of paragraph (h) of this 

section. 

(i) Where to apply. The application 

shall be submitted to the appropriate 

EBSA Regional Office listed in 

Appendix C. Applicants should check 

with the relevant EBSA Regional Office 

whether the office accepts email 

submissions of applications and 

supporting documentation. 

(j) Submission of Additional 

Documentation. If EBSA determines 

that required information is missing 

from the application or that additional 

documentation is needed to complete 

EBSA’s review, EBSA will request such 

documentation in writing from the 

applicant or authorized representative. 

If EBSA does not receive the requested 

documentation within a time period 

specified in writing by the EBSA 

reviewer, EBSA may suspend its review 

of the application and consider 

appropriate action. EBSA will notify the 

applicant or authorized representative 

in writing regarding such suspension. If 

EBSA does not receive the requested 

documentation within a reasonable time 

after providing notice of the suspension, 

EBSA will issue a rejection letter. 

(k) Recordkeeping. The applicant 

must maintain copies of the application 

and any subsequent correspondence 

with EBSA for the period required by 

section 107 of ERISA. 

6.2 VFC Program Self-Correction 

Component Procedures 

(a) In general. Each self-corrector 

must adhere to the requirements set 

forth below. Failure to do so may render 

the self-correction invalid. 

(b) Self-corrector. The SCC notice 

must be submitted by the self-corrector 

who is a Plan Official or an authorized 

representative (e.g., attorney, 

accountant, or other service provider). If 

a representative of the Plan Official is 

submitting the SCC notice, the plan 

administrator must retain a statement 

signed by the Plan Official that the 

representative is authorized to represent 

the Plan Official. Use of the model 

authorization included in the SCC 

Retention Record Checklist in Appendix 

F will satisfy this requirement. Any fees 

paid to such representative for services 

relating to the correction under the SCC 

may not be paid from plan assets. 

(c) Submission of SCC notice. The 

self-corrector must notify EBSA of 

participation in the SCC by submitting 

the SCC notice through the online VFC 

Program web tool in accordance with 

paragraphs 7.1(b)(2)(iii) and 

7.3(c)(2)(ii).67 EBSA will acknowledge 

receipt of a properly completed and 

submitted SCC notice in an email 

addressed to the self-corrector. 

(d) SCC Retention Record Checklist— 

Applicable to Self-Corrections under 

section 7.1(b). The self-corrector of 

delinquent participant contributions 

and loan repayments under section 

7.1(b) must complete the SCC Retention 

Record Checklist in Appendix F, 

prepare or collect the documents listed 

in this Appendix, and provide copies of 

the completed checklist and required 

documentation to the plan 

administrator. 

(e) Penalty of Perjury Statement for 

Self-Corrections under Section 7.1(b). 

The plan administrator must retain the 

following statement: ‘‘Under penalties 

of perjury I certify that I am not Under 

Investigation (as defined in section 

3(b)(3) of the VFC Program) and that I 

have reviewed the SCC notice 

acknowledgment and summary, the 

checklist and all the required 

documentation, and to the best of my 

knowledge and belief the contents are 

true, correct, and complete.’’ The 

statement must be signed and dated by 

a plan fiduciary with knowledge of the 

transaction that is the subject of the selfcorrection and the authorized 

representative of the plan sponsor, if 

any. In addition, each Plan Official who 

is seeking the relief afforded under the 

Program must sign and date the Penalty 

of Perjury Statement. Use of the Penalty 

of Perjury Statement included in 

Appendix F will satisfy the 

requirements of paragraph (e) of this 

section. 

(f) Penalty of Perjury Statement for 

Self-Corrections under Section 7.3(c). 

The plan administrator must retain the 

following statement: ‘‘Under penalties 

of perjury I certify that I have reviewed 

the SCC notice acknowledgment and 

summary, and all the required 

documentation, and to the best of my 

knowledge and belief the contents are 

true, correct, and complete.’’ The 

statement must be signed and dated by 

a plan fiduciary with knowledge of the 

transaction that is the subject of the selfcorrection and the authorized 

representative of the plan sponsor, if 

any. In addition, each Plan Official who 

is seeking the relief afforded under the 

Program must sign and date the Penalty 

of Perjury Statement. 

(g) Contributing or Adopting 

Employers in Multiemployer Plans or 

Multiple Employer Plans. In the case of 

an employer that contributes to or has 

adopted a multiemployer plan or 

multiple employer plan and wishes to 

self-correct a Breach, the Penalty of 

Perjury Statement may be signed and 

dated by the employer and, regardless of 

the employer’s status as a plan 

fiduciary, the Penalty of Perjury 

Statement need not be signed by another 

plan fiduciary. 

(h) Recordkeeping. 

(1) For self-corrections of delinquent 

participant contributions and loan 

repayments under section 7.1(b), the 

plan administrator must retain a copy of 

the SCC Retention Record Checklist in 

Appendix F along with copies of the 

required documentation, the 

authorization form, if any, and a signed 

Penalty of Perjury Statement, for the 

period required by section 107 of 

ERISA. 

(2) For self-corrections of participant 

loan failures under section 7.3(c), the 

plan administrator must retain proof of 

payment of Principal Amount and Lost 

Earnings, or Restoration of Profits, as 

applicable; a copy of the SCC Notice 

Acknowledgment and Summary page; 

the authorization form, if any; and a 

signed Penalty of Perjury Statement, for 

the period required by section 107 of 

ERISA. 

Section 7. Description of Eligible 

Transactions and Corrections Under 

the VFC Program 

EBSA has identified certain Breaches 

and methods of correction that are 

suitable for the VFC Program. Any Plan 

Official may correct a Breach listed in 

this section in accordance with section 

5 and the applicable correction method. 

The correction methods set forth are 

strictly construed and are the only 

acceptable correction methods under 

the VFC Program and the SCC for the 

identified transactions described in this 

section. 

7.1 Delinquent Remittance of 

Participant Funds 

(a) Delinquent Participant Contributions 

and Loan Repayments to Pension Plans 

Under VFC Program Applications 

(1) Description of Transaction. An 

employer receives directly from 

participants, or withholds from 

employees’ paychecks, certain amounts 

for either participants’ contribution to a 

pension plan or for repayment of 

participants’ plan loans. Instead of 

forwarding such contributions or loan 


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Federal Register / Vol. 90, No. 9 / Wednesday, January 15, 2025 / Rules and Regulations 4217 

68The Department amended paragraph (a)(1) of 

29 CFR 2510.3–102 to extend the application of the 

regulation to amounts paid by a participant or 

beneficiary or withheld by an employer from a 

participant’s wages for purposes of repaying a 

participant’s loan (regardless of plan size). 75 FR 

2068 (2010). 

69See 29 CFR 2510.3–102(a)(2), 75 FR 2068 

(2010). 

70The online VFC Program web tool will be 

located on EBSA’s website. 

repayments to the plan for investment 

in accordance with the provisions of the 

plan and by reference to the principles 

of the Department’s regulation at 29 CFR 

2510.3–102, the employer retains such 

amounts for a longer period of time. 

(2) Correction of Transaction. (i) 

Unpaid Participant Contributions or 

Loan Repayments. Pay to the plan the 

Principal Amount plus the greater of (A) 

Lost Earnings on the Principal Amount 

or (B) Restoration of Profits resulting 

from the employer’s use of the Principal 

Amount, as described in section 5(b). 

The Loss Date for such contributions or 

repayments is the date on which each 

contribution reasonably could have 

been segregated from the employer’s 

general assets. In no event shall the Loss 

Date for such contributions or 

repayments be later than the applicable 

maximum time period described in 29 

CFR 2510.3–102.68 Any penalties, late 

fees or other charges shall be paid by the 

employer or another Plan Official and 

not from such contributions or loan 

repayments. 

(ii) Late Participant Contributions or 

Loan Repayments. If participant 

contributions or loan repayments were 

remitted to the plan outside of the time 

periods described above, the only 

correction required is to pay to the plan 

the greater of (A) Lost Earnings or (B) 

Restoration of Profits resulting from the 

employer’s use of the Principal Amount 

as described in section 5(b). Any 

penalties, late fees or other charges shall 

be paid by the employer or another Plan 

Official and not from participant 

contributions or loan repayments. 

(iii) For this transaction, the Principal 

Amount is the amount of delinquent 

participant contributions or loan 

repayments retained by the employer. 

(iv) Example. The principles of 

paragraph (a)(2) of this section are 

illustrated by example in Appendix D. 

(3) Documentation. In addition to the 

documentation required by section 6.1, 

submit the following documents: 

(i) A statement from a Plan Official 

identifying the earliest date on which 

the participant contributions and/or 

repayments reasonably could have been 

segregated from the employer’s general 

assets, along with the supporting 

documentation on which the Plan 

Official relied in reaching this 

conclusion; 

(ii) If restored participant 

contributions and/or repayments 

(exclusive of Lost Earnings) either total 

$50,000 or less, or exceed $50,000 and 

were remitted to the plan within 180 

calendar days from the date such 

amounts were received by the employer, 

or the date such amounts otherwise 

would have been payable to the 

participants in cash (regarding amounts 

withheld by an employer from 

employees’ paychecks), submit: 

(A) A narrative describing the 

applicant’s contribution and/or 

repayment remittance practices before 

and after the period of unpaid or late 

contributions and/or repayments 

including any steps taken to prevent 

future delinquencies, and 

(B) Summary documents 

demonstrating the amount of unpaid or 

late contributions and/or repayments; 

and 

(iii) If restored participant 

contributions and/or repayments 

(exclusive of Lost Earnings) exceed 

$50,000 and were remitted to the plan 

more than 180 calendar days after the 

date such amounts were received by the 

employer, or the date such amounts 

otherwise would have been payable to 

the participants in cash (regarding 

amounts withheld by an employer from 

employees’ paychecks), submit: 

(A) A narrative describing the 

applicant’s contribution and/or 

repayment remittance practices before 

and after the period of unpaid or late 

contributions and/or repayments 

including any steps taken to prevent 

future delinquencies; 

(B) For participant contributions and/ 

or repayments received from 

participants, a copy of the accounting 

records which identify the date and 

amount of each contribution received; 

and 

(C) For participant contributions and/ 

or repayments withheld from 

employees’ paychecks, a copy of the 

payroll documents showing the date 

and amount of each withholding. 

(b) Delinquent Participant Contributions 

and Loan Repayments to Pension Plans 

Under the Self-Correction Component 

(1) Description of Transaction. (i) An 

employer receives directly from 

participants, or withholds from 

employees’ paychecks, certain amounts 

for either participants’ contribution to a 

pension plan or for repayment of 

participants’ plan loans. Instead of 

forwarding such contributions or loan 

repayments to the plan for investment 

in accordance with the provisions of the 

plan and by reference to the principles 

of the Department’s regulation at 29 CFR 

2510.3–102, the employer retains such 

amounts for a longer period of time.69

(ii) For this transaction: (A) the 

amount of Lost Earnings resulting from 

the correction of the delinquent 

participant contributions or loan 

repayments is less than or equal to 

$1,000, excluding any excise tax 

amounts paid to the plan under the 

related class exemption PTE 2002–51; 

and 

(B) the delinquent participant 

contributions or loan repayments were 

remitted to the plan within 180 calendar 

days from the date such amounts were 

received by the employer, or the date 

such amounts otherwise would have 

been payable to the participants in cash 

(regarding amounts withheld by an 

employer from employees’ paychecks). 

(2) Correction of Transaction. (i) 

Unpaid Participant Contributions or 

Loan Repayments. Pay to the plan the 

Principal Amount plus Lost Earnings on 

the Principal Amount as described in 

section (5)(b). The Loss Date for such 

contributions or repayments is the Date 

of Withholding or Receipt in accordance 

with section 5(b)(3)(ii). All calculations 

must be made using the Online 

Calculator in accordance with section 

5(b)(6)(vi). Any penalties, late fees or 

other charges shall be paid by the 

employer or other Plan Official and not 

from participant loan repayments. 

(ii) Principal Amount. For this 

transaction, the Principal Amount is the 

amount of delinquent participant 

contributions or loan repayments 

retained by the employer. 

(iii) SCC Notice. The self-corrector 

must input the required information in 

the fields provided in the SCC notice 

and submit the notice to EBSA through 

the online VFC Program web tool.70 The 

required information includes certain 

data elements listed below: 

(A) name and email address of the 

self-corrector; 

(B) plan name; 

(C) plan sponsor’s nine-digit number 

(EIN) and the plan’s three-digit number 

(PN); 

(D) Principal Amount; 

(E) amount of Lost Earnings and the 

date paid to the plan; 

(F) Loss Date (Date(s) of Withholding 

or Receipt); and 

(G) number of participants affected by 

the correction. 

(3) Documentation. The self-corrector 

must complete the SCC Retention 

Record Checklist in Appendix F, 

prepare or collect the documents listed 


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4218 Federal Register / Vol. 90, No. 9 / Wednesday, January 15, 2025 / Rules and Regulations 

in this Appendix, and provide copies of 

the completed checklist and required 

documentation to the plan 

administrator. 

(c) Delinquent Participant Contributions 

to Insured Welfare Plans 

(1) Description of Transaction. 

Benefits are provided exclusively 

through insurance contracts issued by 

an insurance company or similar 

organization licensed to do business in 

any state or through a health 

maintenance organization (HMO) 

defined in section 1310(c) of the Public 

Health Service Act, 42 U.S.C. 300e–9(c). 

An employer receives directly from 

participants or withholds from 

employees’ paychecks certain amounts 

that the employer forwards to an 

insurance provider for the purpose of 

providing group health or other welfare 

benefits. The employer fails to forward 

such amounts in accordance with the 

terms of the plan (including the 

provisions of any insurance contract) or 

the requirements of the Department’s 

regulation at 29 CFR 2510.3–102. There 

are no instances in which claims have 

been denied under the plan, nor has 

there been any lapse in coverage, due to 

the failure to transmit participant 

contributions on a timely basis. 

(2) Correction of Transaction. (i) Pay 

to the insurance provider or HMO the 

Principal Amount, as well as any 

penalties, late fees, or other charges 

necessary to prevent a lapse in coverage 

due to such failure. Any penalties, late 

fees or other such charges shall be paid 

by the employer or a Plan Official and 

not from participant contributions. 

(ii) For this transaction, the Principal 

Amount is the amount of delinquent 

participant contributions retained by the 

employer. 

(3) Documentation. In addition to the 

documentation required by section 6.1, 

submit the following documents: 

(i) A statement from a Plan Official: 

(A) identifying the earliest date on 

which the participant contributions 

reasonably could have been segregated 

from the employer’s general assets, 

along with the supporting 

documentation on which the Plan 

Official relied in reaching this 

conclusion; (B) attesting that there are 

no instances in which claims have been 

denied under the plan for nonpayment, 

nor has there been any lapse in 

coverage; and (C) attesting that any 

penalties, late fees or other such charges 

have been paid by the Plan Official and 

not from participant contributions; 

(ii) Copies of the insurance contract or 

contracts for the group health or other 

welfare benefits for the plan; 

(iii) If restored participant 

contributions either total $50,000 or 

less, or exceed $50,000 and were 

remitted to the insurance provider 

within 180 calendar days from the date 

such amounts were received by the 

employer, or the date such amounts 

otherwise would have been payable to 

the participants in cash (regarding 

amounts withheld by an employer from 

employees’ paychecks), submit: 

(A) a narrative describing the 

applicant’s contribution practices before 

and after the period of unpaid or late 

contributions, and 

(B) summary documents 

demonstrating the amount of unpaid or 

late contributions; and 

(iv) If restored participant 

contributions exceed $50,000 and were 

remitted to the insurance provider more 

than 180 calendar days after the date 

such amounts were received by the 

employer, or the date such amounts 

otherwise would have been payable to 

the participants in cash (regarding 

amounts withheld by an employer from 

employees’ paychecks), submit: 

(A) a narrative describing the 

applicant’s contribution remittance 

practices before and after the period of 

unpaid or late contributions including 

any steps taken to prevent future 

delinquencies, 

(B) for participant contributions 

received directly from participants, a 

copy of the accounting records which 

identify the date and amount of each 

contribution received, and 

(C) for participant contributions 

withheld from employees’ paychecks, a 

copy of the payroll documents showing 

the date and amount of each 

withholding. 

(d) Delinquent Participant Contributions 

to Welfare Plan Trusts 

(1) Description of Transaction. An 

employer receives directly from 

participants or withholds from 

employees’ paychecks certain amounts 

that the employer forwards to a trust 

maintained to provide, through 

insurance or otherwise, group health or 

other welfare benefits. The employer 

fails to forward such amounts in 

accordance with the terms of the plan or 

the requirements of the Department’s 

regulation at 29 CFR 2510.3–102. There 

are no instances in which claims have 

been denied under the plan, nor has 

there been any lapse in coverage, due to 

the failure to transmit participant 

contributions on a timely basis. 

(2) Correction of Transaction. (i) 

Unpaid Contributions. Pay to the trust 

(A) the Principal Amount, and, where 

applicable, any penalties, late fees, or 

other charges necessary to prevent a 

lapse in coverage due to the failure to 

make timely payments, and (B) the 

greater of (1) Lost Earnings on the 

Principal Amount or (2) Restoration of 

Profits resulting from the employer’s use 

of the Principal Amount as described in 

section 5(b). The Loss Date for such 

contributions is the date on which each 

contribution would become plan assets 

under 29 CFR 2510.3–102. Any 

penalties, late fees or other charges shall 

be paid by the employer or a Plan 

Official and not from participant 

contributions. 

(ii) Late Contributions. If participant 

contributions were remitted to the trust 

outside of the time period required by 

the regulation, the only correction 

required is to pay to the trust the greater 

of (A) Lost Earnings or (B) Restoration 

of Profits resulting from the employer’s 

use of the Principal Amount as 

described in section 5(b). Any penalties, 

late fees or other such charges shall be 

paid by the employer or a Plan Official 

and not from participant contributions. 

(iii) For this transaction, the Principal 

Amount is the amount of delinquent 

participant contributions retained by the 

employer. 

(3) Documentation. In addition to the 

documentation required by section 6.1, 

submit the following documents: 

(i) A statement from a Plan Official: 

(A) identifying the earliest date on 

which the participant contributions 

reasonably could have been segregated 

from the employer’s general assets, 

along with the supporting 

documentation on which the Plan 

Official relied in reaching this 

conclusion, and (B) attesting that there 

are no instances in which claims have 

been denied under the plan for 

nonpayment, nor has there been any 

lapse in coverage; 

(ii) If restored participant 

contributions (exclusive of Lost 

Earnings) either total $50,000 or less, or 

exceed $50,000 and were remitted to the 

trust within 180 calendar days from the 

date such amounts were received by the 

employer, or the date such amounts 

otherwise would have been payable to 

the participants in cash (regarding 

amounts withheld by an employer from 

employees’ paychecks), submit: 

(A) a narrative describing the 

applicant’s contribution practices before 

and after the period of unpaid or late 

contributions including any steps taken 

to prevent future delinquencies, and 

(B) summary documents 

demonstrating the amount of unpaid or 

late contributions; and 

(iii) If restored participant 

contributions (exclusive of Lost 

Earnings) exceed $50,000 and were 

remitted to the trust more than 180 


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Federal Register / Vol. 90, No. 9 / Wednesday, January 15, 2025 / Rules and Regulations 4219 

calendar days after the date such 

amounts were received by the employer, 

or the date such amounts otherwise 

would have been payable to the 

participants in cash (regarding amounts 

withheld by an employer from 

employees’ paychecks), submit: 

(A) a narrative describing the 

applicant’s contribution remittance 

practices before and after the period of 

unpaid or late contributions, 

(B) for participant contributions 

received directly from participants, a 

copy of the accounting records which 

identify the date and amount of each 

contribution received, and 

(C) for participant contributions 

withheld from employees’ paychecks, a 

copy of the payroll documents showing 

the date and amount of each 

withholding. 

7.2 Loans 

(a) Loan at Fair Market Interest Rate to 

a Party in Interest With Respect to the 

Plan 

(1) Description of Transaction. A plan 

made a loan to a party in interest at an 

interest rate no less than that for loans 

with similar terms (for example, the 

amount of the loan, amount and type of 

security, repayment schedule, and 

duration of loan) to a borrower of 

similar creditworthiness. The loan was 

not exempt from the prohibited 

transaction provisions of Title I of 

ERISA. 

(2) Correction of Transaction. Pay off 

the loan in full, including any 

prepayment penalties. An independent 

commercial lender must also confirm in 

writing that the loan was made at a fair 

market interest rate for a loan with 

similar terms to a borrower of similar 

creditworthiness. 

(3) Documentation. In addition to the 

documentation required by section 6.1, 

submit a narrative describing the 

process used to determine the fair 

market interest rate at the time the loan 

was made, validated in writing by an 

independent commercial lender. 

(b) Loan at Below-Market Interest Rate 

to a Party in Interest With Respect to the 

Plan 

(1) Description of Transaction. A plan 

made a loan to a party in interest with 

respect to the plan at an interest rate 

that, at the time the loan was made, was 

less than the fair market interest rate for 

loans with similar terms (for example, 

the amount of loan, amount and type of 

security, repayment schedule, and 

duration of the loan) to a borrower of 

similar creditworthiness. The loan was 

not exempt from the prohibited 

transaction provisions of Title I of 

ERISA. 

(2) Correction of Transaction. (i) Pay 

off the loan in full, including any 

prepayment penalties. Pay to the plan 

the Principal Amount, plus the greater 

of (A) the Lost Earnings as described in 

section 5(b), or (B) the Restoration of 

Profits, if any, as described in section 

5(b). 

(ii) For purposes of this transaction, 

each loan payment has a Principal 

Amount equal to the excess of the loan 

payment that would have been received 

if the loan had been made at the fair 

market interest rate (from the beginning 

of the loan until the Recovery Date) over 

the loan payment actually received 

under the loan terms during such 

period. Under the VFC Program, the fair 

market interest rate must be determined 

by an independent commercial lender. 

Example. The plan made to a party in 

interest a $150,000 mortgage loan, 

secured by a first Deed of Trust, at a 

fixed interest rate of 4% per annum. The 

loan was to be fully amortized over 30 

years. The fair market interest rate for 

comparable loans, at the time this loan 

was made, was 7% per annum. The 

party in interest or Plan Official must 

repay the loan in full plus any 

applicable prepayment penalties. The 

party in interest or Plan Official also 

must pay the difference between what 

the plan would have received through 

the Recovery Date had the loan been 

made at 7% and what, in fact, the plan 

did receive from the commencement of 

the loan to the Recovery Date, plus Lost 

Earnings on that amount as described in 

section 5(b). 

(3) Documentation. In addition to the 

documentation required by section 6.1, 

submit the following documents: 

(i) A narrative describing the process 

used to determine the interest rate at the 

time the loan was made; 

(ii) A copy of the independent 

commercial lender’s fair market interest 

rate determination(s); and 

(iii) A copy of the independent 

fiduciary’s dated, written approval of 

the fair market interest rate 

determination(s), except for belowmarket interest rate loans of $10,000 or 

less. 

(c) Loan at Below-Market Interest Rate 

to a Person Who Is Not a Party in 

Interest With Respect to the Plan 

(1) Description of Transaction. A plan 

made a loan to a person who is not a 

party in interest with respect to the plan 

at an interest rate which, at the time the 

loan was made, was less than the fair 

market interest rate for loans with 

similar terms (for example, the amount 

of loan, amount and type of security, 

repayment schedule, and duration of the 

loan) to a borrower of similar 

creditworthiness. 

(2) Correction of Transaction. (i) Pay 

to the plan the Principal Amounts from 

the inception of the loan until the 

Recovery Date, plus Lost Earnings on 

the series of Principal Amounts through 

the Recovery Date, as described in 

section 5(b). 

(ii) In addition, the applicant or other 

party must pay to the plan the present 

value of the Principal Amounts from the 

Recovery Date to the maturity date of 

the loan, as determined by an 

independent commercial lender. The 

borrower must continue to pay to the 

plan the outstanding loan balance 

according to the repayment schedule for 

the duration of the loan. Alternatively, 

instead of the applicant or other party 

paying the present value of the Principal 

Amounts, the borrower may pay to the 

plan the outstanding loan balance 

amortized over the remaining payment 

schedule for the duration of the loan at 

the interest rate that would have been 

applicable if the loan had been made at 

the fair market interest rate. 

(iii) For purposes of this transaction, 

each loan payment has a Principal 

Amount equal to the excess of the loan 

payment that would have been received 

if the loan had been made at the fair 

market interest rate (from the inception 

of the loan until the Recovery Date) over 

the loan payment actually received 

under the loan terms during such 

period. Under the VFC Program, the fair 

market interest rate must be determined 

by an independent commercial lender. 

(iv) The principles of paragraph (c)(2) 

of this section are illustrated in the 

following example: 

Example. The plan made a $150,000 

mortgage loan, secured by a first Deed 

of Trust, at a fixed interest rate of 4% 

per annum. The loan was to be fully 

amortized over 30 years. The fair market 

interest rate for comparable loans, at the 

time this loan was made, was 7% per 

annum. The applicant or other person 

must pay the excess of what the plan 

would have received through the 

Recovery Date had the loan been made 

at 7% over what, in fact, the plan did 

receive from the commencement of the 

loan to the Recovery Date (the Principal 

Amounts from the loan’s inception until 

the Recovery Date), plus Lost Earnings 

on that amount as described in section 

5(b). The applicant must also pay on the 

Recovery Date the present value of the 

difference of what the plan would have 

received between the 7% and the 4% 

interest rate for the remaining payments 

on the loan for the duration of the time 

the plan is owed repayments on the loan 

(the Principal Amounts from the 

Recovery Date until the loan’s maturity 


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4220 Federal Register / Vol. 90, No. 9 / Wednesday, January 15, 2025 / Rules and Regulations 

date). The borrower must continue to 

repay the outstanding loan balance 

based on the loan’s repayment schedule. 

(3) Documentation. In addition to the 

documentation required by section 6.1, 

submit the following documents: 

(i) A narrative describing the process 

used to determine the interest rate at the 

time the loan was made; 

(ii) A copy of the independent 

commercial lender’s fair market interest 

rate determination(s); and 

(iii) If applicable, a copy of the loan 

repayment schedule for the re-amortized 

loan repayments. 

(d) Loan at Below-Market Interest Rate 

Solely Due to a Delay in Perfecting the 

Plan’s Security Interest 

(1) Description of Transaction. For 

purposes of the VFC Program, if a plan 

made a purportedly secured loan to a 

person who is not a party in interest 

with respect to the plan, but there was 

a delay in recording or otherwise 

perfecting the plan’s interest in the loan 

collateral, the loan will be treated as an 

unsecured loan until the plan’s security 

interest is perfected. 

(2) Correction of Transaction. (i) Pay 

to the plan the Principal Amounts 

through the date the loan became fully 

secured, plus Lost Earnings on the series 

of Principal Amounts, as described in 

section 5(b). 

(ii) Record or perfect the plan’s 

interest in the loan collateral. 

(iii) In addition, if the delay in 

perfecting the loan’s security caused a 

permanent change in the risk 

characteristics of the loan, the fair 

market interest rate for the remaining 

term of the loan must be determined by 

an independent commercial lender. In 

that case the correction amount includes 

an additional payment to the plan. The 

applicant must pay to the plan the 

present value of the Principal Amounts 

from the date the loan is fully secured 

to the maturity date of the loan, as 

determined by an independent 

commercial lender. The borrower must 

continue to pay to the plan the 

outstanding loan balance according to 

the repayment schedule for the duration 

of the loan. Alternatively, instead of the 

applicant paying the present value of 

the Principal Amounts, the borrower 

may pay to the plan the outstanding 

loan balance amortized over the 

remaining payment schedule for the 

duration of the loan at the interest rate 

that would have been applicable if the 

loan had been made at the fair market 

interest rate that would have been 

applicable for a loan with the changed 

risk characteristics. 

(iv) For purposes of this transaction, 

each loan payment has a Principal 

Amount equal to the excess of the loan 

payment that would have been received 

if the loan had been made at the fair 

market interest rate for an unsecured 

loan (from the inception of the loan 

until the Recovery Date) over the loan 

payment actually received under the 

loan terms during such period. Under 

the VFC Program, the fair market 

interest rate must be determined by an 

independent commercial lender. 

(v) The principles of paragraph (d)(2) 

of this section are illustrated in the 

following examples: 

Example 1. The plan made a mortgage 

loan, which was supposed to be secured 

by a Deed of Trust. The plan’s Deed was 

not recorded for six months, but, when 

it was recorded, the Deed was in first 

position. The interest rate on the loan 

was the fair market interest rate for a 

mortgage loan secured by a first-position 

Deed of Trust. The loan is treated as an 

unsecured, below-market loan for the 

six months prior to the recording of the 

Deed of Trust. 

Example 2. Assume the same facts as 

in Example 1, except that, as a result of 

the delay in recording the Deed, the 

plan ended up in second position 

behind another lender. The risk to the 

plan is higher and the interest rate on 

the note is no longer commensurate 

with that risk. The loan is treated as a 

below-market loan (based on the lack of 

security) for the six months prior to the 

recording of the Deed of Trust and as a 

below-market loan (based on secondary 

status security) from the time the Deed 

is recorded until the end of the loan. 

(3) Documentation. In addition to the 

documentation required by section 6.1, 

submit the following documents: 

(i) A narrative describing the process 

used to determine the fair market 

interest rate for the period that the loan 

was unsecured and, if applicable, for the 

remaining term of the loan; 

(ii) A copy of the independent 

commercial lender’s fair market interest 

rate determination(s); and 

(iii) If applicable, a copy of the loan 

repayment schedule for the re-amortized 

loan repayments. 

7.3 Participant Loans 

(a) Loans Failing To Comply With Plan 

Provisions for Amount, Duration, or 

Level Amortization Corrected Under 

VFC Program Applications 

(1) Description of Transaction. A plan 

extended a loan to a plan participant 

who is a party in interest with respect 

to the plan based solely on their status 

as an employee of any employer whose 

employees are covered by the plan, as 

defined in section 3(14)(H) of ERISA. 

The loan was a prohibited transaction 

that failed to qualify for ERISA’s 

statutory exemption for plan loan 

programs because the loan terms did not 

comply with applicable plan provisions, 

which incorporated the requirements of 

section 72(p) of the Code concerning: 

(i) the amount of the loan, 

(ii) the duration of the loan, or 

(iii) the level amortization of the loan 

repayment. 

(2) Correction of Transaction. Plan 

Officials must make a voluntary 

correction of the loan with IRS approval 

under the Voluntary Correction Program 

of the IRS’s EPCRS. 

(3) Documentation. The applicant is 

not required to submit any of the 

supporting documentation listed in 

section 6.1(e) unless otherwise 

requested by EBSA, except that the 

applicant must provide (i) proof of 

payment, as described in paragraph 

(e)(6) of section 6.1, and (ii) a copy of 

the IRS compliance statement. 

(b) Default Loans Corrected Under VFC 

Program Applications 

(1) Description of Transaction. A plan 

extended a loan to a plan participant 

who is a party in interest with respect 

to the plan based solely on their status 

as an employee of any employer whose 

employees are covered by the plan, as 

defined in section 3(14)(H) of ERISA. At 

origination, the loan qualified for 

ERISA’s statutory exemption for plan 

loan programs because the loan 

complied with applicable plan 

provisions, which incorporated the 

requirements of section 72(p) of the 

Code. During the loan repayment 

period, the Plan Official responsible for 

loan administration failed to properly 

withhold a number of loan repayments 

from the participant’s wages and 

included the amount of such 

repayments in the participant’s wages 

based on administrative or systems 

processing errors. The failure to 

withhold is a Breach causing the loan to 

become non-compliant with applicable 

plan provisions, which incorporated the 

requirements of section 72(p) of the 

Code. 

(2) Correction of Transaction. Plan 

Officials must make a voluntary 

correction of the loan with IRS approval 

under the Voluntary Correction Program 

of the IRS’s EPCRS. 

(3) Documentation. The applicant is 

not required to submit any of the 

supporting documentation listed in 

section 6.1(e) unless otherwise 

requested by EBSA, except that the 

applicant must provide (i) proof of 

payment, as described in paragraph 

(e)(6) of section 6.1, and (ii) a copy of 

the IRS compliance statement. 


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Federal Register / Vol. 90, No. 9 / Wednesday, January 15, 2025 / Rules and Regulations 4221 

71The resale of the same property to the party in 

interest from whom the asset was purchased is a 

reversal of the original prohibited transaction. The 

resale is not a new prohibited transaction and 

therefore does not require an exemption. 

(c) Eligible Inadvertent Participant Loan 

Failures Under the Self-Correction 

Component 

(1) Description of Transaction. A plan 

extended a loan to a plan participant 

who is a party in interest with respect 

to the plan based solely on their status 

as an employee of any employer whose 

employees are covered by the plan, as 

defined in section 3(14)(H) of ERISA. 

There is an Eligible Inadvertent 

Participant Loan Failure that involves a 

Breach as defined in section 3(b)(1) of 

the Program. An Eligible Inadvertent 

Participant Loan Failure is a participant 

loan failure that occurs despite the 

existence of practices and procedures 

that satisfy the standards set forth in, 

and is eligible for self-correction under, 

the IRS’s EPCRS. An Eligible 

Inadvertent Participant Loan Failure 

shall not include any participant loan 

failure that is egregious, relates to the 

diversion or misuse of plan assets, or is 

directly or indirectly related to an 

abusive tax avoidance transaction. 

(2) Correction of Transaction. (i) Plan 

Officials must make a voluntary selfcorrection of the Eligible Inadvertent 

Participant Loan Failure under the SelfCorrection Program (SCP) of the IRS’s 

EPCRS. 

(ii) SCC Notice. The self-corrector 

must input the required information in 

the fields provided in the SCC notice 

and submit the notice electronically to 

EBSA through the online VFC Program 

web tool. The required information 

includes certain data elements listed 

below: 

(A) name and email address of the 

self-corrector; 

(B) plan name; 

(C) plan sponsor’s nine-digit number 

(EIN) and the plan’s three-digit number 

(PN); 

(D) Type of participant loan failure; 

(E) Loan amount; 

(F) Date the failure is identified; 

(G) Date of correction; 

(H) Correction method; and 

(I) Number of participants affected by 

the correction. 

(3) Documentation. The self-corrector 

shall provide the plan administrator 

with copies of the documentation 

required under section 6.2. Completion 

of the SCC Retention Record Checklist 

in Appendix F and supporting 

documents is not required. 

7.4 Purchases, Sales and Exchanges 

(a) Purchase of an Asset (Including 

Real Property) by a Plan from a Party in 

Interest 

(1) Description of Transaction. A plan 

purchased an asset with cash from a 

party in interest with respect to the 

plan, in a transaction to which no 

prohibited transaction exemption 

applies. 

(2) Correction of Transaction. (i) The 

plan may sell the asset back to the party 

in interest who originally sold the asset 

to the plan 71 or to a person who is not 

a party in interest. Whether the asset is 

sold to a person who is not a party in 

interest with respect to the plan or is 

sold back to the original seller, the plan 

must receive the higher of (A) the FMV 

of the asset at the time of resale, without 

a reduction for the costs of sale, plus 

restoration to the plan of the party in 

interest’s investment return from the 

proceeds of the sale, to the extent they 

exceed the plan’s net profits from 

owning the property; or (B) the 

Principal Amount, plus the greater of (1) 

Lost Earnings on the Principal Amount 

as described in section 5(b), or (2) the 

Restoration of Profits, if any, as 

described in section 5(b). 

(ii) As an alternative to the correction 

described in paragraph (a)(2)(i) above, 

the plan may retain the asset and 

receive (A) the greater of (1) Lost 

Earnings less any earnings received on 

the asset up to the Recovery Date or (2) 

the Restoration of Profits, if any, as 

described in section 5(b), on the 

Principal Amount, but only to the extent 

that such Lost Earnings or Restoration of 

Profits exceeds the difference between 

the FMV of the asset as of the Recovery 

Date and the original purchase price; 

and (B) the amount by which the 

Principal Amount exceeded the FMV of 

the asset (at the time of the original 

purchase), plus the greater of (1) Lost 

Earnings or (2) Restoration of Profits, if 

any, as described in section 5(b), on 

such excess; provided an independent 

fiduciary determines that the plan will 

realize a greater benefit from this 

correction than it would from the resale 

of the asset described in paragraph 

(a)(2)(i) above. 

(iii) As a cash settlement alternative, 

when the plan no longer owns the asset 

and the transaction cannot be reversed 

or the asset cannot be retained as 

described respectively in paragraphs 

(a)(2)(i) and (ii) above, the plan may 

accept in cash the amounts specified in 

(A) plus (B) where (A) is—the greater of 

(1) Lost Earnings less any earnings 

received on the asset up to the Recovery 

Date or (2) the Restoration of Profits, if 

any, as described in section 5(b), on the 

Principal Amount, and (3) with the 

resulting amount from (1) or (2) reduced 

by any profit if the asset were resold or 

matured at a gain, or increased by any 

loss including Lost Earnings on such 

loss if either the asset was resold at a 

loss or the plan otherwise ceased to own 

the asset (e.g., maturity; destruction); 

and (B) is—the amount by which the 

Principal Amount exceeded the FMV of 

the asset (at the time of the original 

purchase), plus the greater of (1) Lost 

Earnings or (2) Restoration of Profits, if 

any, as described in section 5(b), on 

such excess. If the plan sold the asset, 

the asset must have been sold upon the 

advice of an independent fiduciary and 

not in anticipation of applying under 

the VFC Program. 

(iv) For this transaction, the Principal 

Amount is the plan’s original purchase 

price. 

(v) The principles of paragraph (a)(2) 

of this section are illustrated in the 

following examples: 

Example 1. A plan purchased a parcel 

of real property from the plan sponsor. 

The plan does not lease the property to 

any person. Instead, the plan uses the 

property as an office. The plan paid 

$120,000 for the property and $5,000 in 

transaction costs. As part of the 

correction, the Plan Official obtains two 

appraisals from a qualified, independent 

appraiser in order to determine the FMV 

of the property at the time of the 

purchase and at the time of the 

correction (the ‘‘Recovery Date’’). The 

FMV of the property at the time of 

purchase was $100,000 ($20,000 less 

than the plan paid for the property). As 

of the Recovery Date, the appraiser 

values the property at $110,000. To 

correct the transaction, the plan sponsor 

repurchases the property for $120,000 

with no reduction for the costs of sale 

and reimburses the plan for the $5,000 

in initial costs of sale. The plan sponsor 

also must pay the plan the greater of the 

plan’s Lost Earnings or the sponsor’s 

investment return on these amounts. 

The determination of an independent 

fiduciary is not required because the 

applicant is correcting the transaction 

by selling the asset back to the party in 

interest pursuant to paragraph (a)(2)(i) 

of this section. 

Example 2. On February 1, 2002, a 

plan purchased from a party in interest 

a parcel of commercial real estate for 

$120,000 and incurred $5,000 in costs of 

sale. The plan initially uses the property 

as an office. At the same time, it is 

discovered that the original purchase 

was a prohibited transaction, the plan 

enters into a lucrative lease with an 

unrelated party for use of the property 

to begin January 1 of the following year. 

Due to commercial developments in 

adjacent properties, the Plan Official 

believes that the property will increase 

in value and that the plan would be able 


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72The repurchase of the same property from the 

party in interest to whom the asset was sold is a 

reversal of the original prohibited transaction. The 

repurchase is not a new prohibited transaction and 

therefore does not require an individual prohibited 

transaction exemption. 

to obtain substantially increasing rental 

payments for the use of the property. As 

part of the correction, the Plan Official 

obtains two appraisals from a qualified, 

independent appraiser in order to 

determine the FMV of the asset at the 

time of the purchase and at the time of 

the correction (the ‘‘Recovery Date’’). 

The FMV of the property at the time of 

purchase was $120,000 (the same as the 

original purchase price). As of the 

Recovery Date, the property is valued at 

$150,000. Lost Earnings are calculated 

through September 30, 2005, the 

anticipated Recovery Date. The Online 

Calculator determined that Lost 

Earnings is $26,098.23 on the Principal 

Amount of $125,000 (purchase price 

plus transaction costs). There were no 

determinable profits. The increase in the 

FMV, $30,000, is greater than Lost 

Earnings or Restoration of Profits. 

Because the property is rapidly 

appreciating in value, and because the 

Plan Official expects to realize 

significant rental income from the 

property, the Plan Official would like to 

correct by retaining the property 

pursuant to paragraph (a)(2)(ii) of this 

section rather than selling the asset back 

to the party in interest pursuant to 

paragraph (a)(2)(i) of this section. The 

Plan Official must obtain a 

determination by an independent 

fiduciary that the plan will realize a 

greater benefit by retaining the asset 

than by selling the asset back to the 

party in interest. Because the original 

purchase price was the same as the 

FMV, and the increase in the FMV is 

greater than any earnings or investment 

return on the original purchase price, 

the only cash payment to the plan 

involved in this correction is the $5,000 

in costs of sale, plus Lost Earnings. 

Example 3. The plan purchased bonds 

from a party in interest on November 30, 

2011 (the ‘‘Loss Date’’) at a face value of 

$100,000 with a yield of 2% interest 

annually. The purchase was at FMV, 

and the bonds’ maturity date was 

November 30, 2012. The plan received 

$102,000 on November 30, 2012 (the 

‘‘Recovery Date’’). In January 2013, the 

plan trustee realized that the original 

purchase was a prohibited transaction 

because the seller is a party in interest. 

There were no determinable profits. 

Under these facts, because the plan no 

longer owns the asset, the transaction 

cannot be reversed under paragraph 

(a)(2)(i) above. Similarly, the plan 

cannot use the correction under 

paragraph (a)(2)(ii) above. A Plan 

Official may correct the transaction 

under paragraph (a)(2)(iii) by paying to 

the plan on January 7, 2013 (the ‘‘Final 

Payment Date’’) an amount of cash equal 

to the Lost Earnings as calculated using 

the Online Calculator less the interest 

paid on the bonds ($3,055.55–$2,000). 

(3) Documentation. In addition to the 

documentation required by section 6.1, 

submit the following documents: 

(i) Documentation of the plan’s 

purchase of the asset, including the date 

of the purchase, the plan’s purchase 

price, and the identity of the seller; 

(ii) A narrative describing the 

relationship between the original seller 

of the asset and the plan; 

(iii) The qualified, independent 

appraiser’s report addressing the FMV 

of the asset purchased by the plan, both 

at the time of the original purchase and 

at the recovery date; 

(iv) If applicable, a report of the 

independent fiduciary’s determination 

that the plan will realize a greater 

benefit by receiving the correction 

amount described in paragraph (a)(2)(ii) 

of this section than by reselling the asset 

pursuant to paragraph (a)(2)(i) of this 

section; and 

(v) In a transaction involving a cash 

settlement correction under section 

7.4(a)(2)(iii) where the plan sold the 

asset, a statement by a Plan Official that 

the asset was sold upon the advice of an 

independent fiduciary and not in 

anticipation of applying under the VFC 

Program. 

(b) Sale of an Asset (Including Real 

Property) by a Plan to a Party in Interest 

(1) Description of Transaction. A plan 

sold an asset for cash to a party in 

interest with respect to the plan, in a 

transaction to which no prohibited 

transaction exemption applies. 

(2) Correction of Transaction. (i) The 

plan may repurchase the asset from the 

party in interest 72 at the lower of (A) the 

price for which it originally sold the 

property or (B) the FMV of the property 

as of the Recovery Date plus restoration 

to the plan of the party in interest’s net 

profits from owning the property, to the 

extent they exceed the plan’s 

investment return from the proceeds of 

the sale. 

(ii) As an alternative to the correction 

described in paragraph (b)(2)(i) above, 

the plan may receive the Principal 

Amount plus the greater of (A) Lost 

Earnings as described in section 5(b) or 

(B) the Restoration of Profits, if any, as 

described in section 5(b), provided an 

independent fiduciary determines that 

the plan will realize a greater benefit 

from this correction than it would from 

the repurchase of the asset described in 

paragraph (b)(2)(i), or provided a Plan 

Official determines that the asset cannot 

be repurchased (e.g., maturity, 

destruction). 

(iii) For this transaction, the Principal 

Amount is the amount by which the 

FMV of the asset (at the time of the 

original sale) exceeds the original sale 

price. 

(iv) The principles of paragraph (b)(2) 

of this section are illustrated in the 

following examples: 

Example 1. A plan sold a parcel of 

unimproved real property to the plan 

sponsor. The sponsor did not make any 

profit on the use of the property. As part 

of the correction, the Plan Official 

obtains an appraisal of the property 

reflecting the FMV of the property as of 

the date of sale from a qualified, 

independent appraiser. The appraiser 

values the property at $130,000, 

although the plan sold the property to 

the plan sponsor for $120,000. The plan 

did not incur any transaction costs 

during the original sale. As of the 

Recovery Date, the appraiser values the 

property at $140,000. The plan corrects 

the transaction by repurchasing the 

property at the original sale price of 

$120,000, with the party in interest 

assuming the costs of the reversal of the 

sale transaction. The determination of 

an independent fiduciary is not required 

because the applicant is correcting the 

transaction by repurchasing the 

property from the party in interest 

pursuant to paragraph (b)(2)(i) of this 

section. 

Example 2. Assume the same facts as 

in Example 1, except that the appraiser 

values the property as of the Recovery 

Date at $100,000, and the plan 

fiduciaries believe that the property will 

continue to decrease in value based on 

environmental studies conducted in 

adjacent areas. Based on the 

determination of an independent 

fiduciary that the plan will realize a 

greater benefit by receiving the Principal 

Amount (FMV of the asset at the time 

of the original sale less the original sales 

price equals $10,000) plus the greater of 

Lost Earnings or Restoration of Profits, 

as described in section 5(b), the 

transaction is corrected by cash 

settlement pursuant to paragraph 

(b)(2)(ii) of this section, rather than by 

repurchasing the asset. 

(3) Documentation. In addition to the 

documentation required by section 6.1, 

submit the following documents: 

(i) Documentation of the plan’s sale of 

the asset, including the date of the sale, 

the sales price, and the identity of the 

original purchaser; 

(ii) A narrative describing the 

relationship of the purchaser to the asset 


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73 If the plan purchased the property from the 

plan sponsor or an affiliate of the plan sponsor, the 

sale of the same property back to the plan sponsor 

or affiliate is a reversal of the prohibited 

transaction. The sale is not a new prohibited 

transaction and therefore does not require an 

individual prohibited transaction exemption, as 

long as the plan did not make improvements while 

it owned the property. 

and the relationship of the purchaser to 

the plan; 

(iii) The qualified, independent 

appraiser’s report addressing the FMV 

of the property at the time of the sale 

from the plan and as of the Recovery 

Date; and 

(iv) If applicable, a report of the 

independent fiduciary’s determination 

that the plan will realize a greater 

benefit by receiving the correction 

amount described in paragraph (b)(2)(ii) 

of this section than by repurchasing the 

asset pursuant to paragraph (b)(2)(i) of 

this section, or if the asset cannot be 

repurchased, a written explanation of 

such circumstance from the Plan 

Official making this determination. 

(c) Sale and Leaseback of Real Property 

to Employer 

(1) Description of Transaction. The 

plan sponsor, or an affiliate of the plan 

sponsor, sold a parcel of real property 

to the plan, which then was leased back 

to the sponsor or affiliate, in a 

transaction that is not otherwise 

exempt. 

(2) Correction of Transaction. (i) The 

transaction must be corrected by the 

sale of the parcel of real property back 

to the plan sponsor or affiliate of the 

plan sponsor, or to a person who is not 

a party in interest with respect to the 

plan.73 The plan must receive the higher 

of (A) FMV of the asset at the time of 

resale, without a reduction for the costs 

of sale; or (B) the Principal Amount, 

plus the greater of (1) Lost Earnings on 

the Principal Amount as described in 

section 5(b), or (2) the Restoration of 

Profits, if any, as described in section 

5(b). 

(ii) For purposes of this transaction, 

the Principal Amount is the plan’s 

original purchase price. 

(iii) If the plan has not been receiving 

rent at FMV, as determined by a 

qualified, independent appraisal, the 

sale price of the real property should 

not be based on the historic belowmarket rent that was paid to the plan. 

(iv) In addition to the correction 

amount in subparagraph (1), if the plan 

was not receiving rent at FMV, as 

determined by a qualified, independent 

appraiser, the Principal Amount also 

includes the difference between the rent 

actually paid and the rent that should 

have been paid at FMV. The plan 

sponsor or an affiliate of the plan 

sponsor must pay to the plan this 

additional Principal Amount, plus the 

greater of (A) Lost Earnings or (B) 

Restoration of Profits resulting from the 

plan sponsor’s or affiliate’s use of the 

Principal Amount, as described in 

section 5(b). 

(v) The principles of paragraph (c)(2) 

of this section are illustrated in the 

following example: 

Example. The plan purchased at FMV 

from the plan sponsor an office building 

that served as the sponsor’s primary 

business site. Simultaneously, the plan 

sponsor leased the building from the 

plan at below the market rental rate. The 

Plan Official obtains from a qualified, 

independent appraiser an appraisal of 

the property reflecting the FMV of the 

property and rent. To correct the 

transaction, the plan sponsor purchases 

the property from the plan at the higher 

of the appraised value at the time of the 

resale or the original sales price and also 

pays the Lost Earnings. Because the rent 

paid to the plan was below the market 

rate, the sponsor must also make up the 

difference between the rent paid under 

the terms of the lease and the amount 

that should have been paid, plus Lost 

Earnings on this amount, as described in 

section 5(b). 

(3) Documentation. In addition to the 

documentation required by section 6.1, 

submit the following documents: 

(i) Documentation of the plan’s 

purchase of the real property, including 

the date of the purchase, the plan’s 

purchase price, and the identity of the 

original seller; 

(ii) Documentation of the plan’s sale 

of the asset, including the date of sale, 

the sales price, and the identity of the 

purchaser; 

(iii) A narrative describing the 

relationship of the original seller to the 

plan and the relationship of the 

purchaser to the plan; 

(iv) A copy of the lease; 

(v) Documentation of the date and 

amount of each lease payment received 

by the plan; and 

(vi) The qualified, independent 

appraiser’s report addressing both the 

FMV of the property at the time of the 

original sale and at the Recovery Date, 

and the FMV of the lease payments. 

(d) Purchase of an Asset (Including Real 

Property) by a Plan From a Person Who 

Is Not a Party in Interest With Respect 

to the Plan at a Price More Than Fair 

Market Value 

(1) Description of Transaction. A plan 

acquired an asset from a person who is 

not a party in interest with respect to 

the plan, without determining the 

asset’s FMV. As a result, the plan paid 

more than it should have for the asset. 

(2) Correction of Transaction. The 

Principal Amount is the difference 

between the actual purchase price and 

the asset’s FMV at the time of purchase. 

The plan must receive the Principal 

Amount plus the Lost Earnings, as 

described in section 5(b). 

(i) The principles of paragraph (d)(2) 

of this section are illustrated in the 

following example: 

Example. A plan bought unimproved 

land without obtaining a qualified, 

independent appraisal. Upon 

discovering that the purchase price was 

$10,000 more than the appraised FMV, 

the Plan Official pays the plan the 

Principal Amount of $10,000, plus Lost 

Earnings as described in section 5(b). 

(3) Documentation. In addition to the 

documentation required by section 6.1, 

submit the following documents: 

(i) Documentation of the plan’s 

original purchase of the asset, including 

the date of the purchase, the purchase 

price, and the identity of the seller; 

(ii) A narrative describing the 

relationship of the seller to the plan; 

and 

(iii) A copy of the qualified, 

independent appraiser’s report 

addressing the value at the time of the 

plan’s purchase. 

(e) Sale of an Asset (Including Real 

Property) by a Plan to a Person Who Is 

Not a Party in Interest With Respect to 

the Plan at a Price Less Than Fair 

Market Value 

(1) Description of Transaction. A plan 

sold an asset to a person who is not a 

party in interest with respect to the 

plan, without determining the asset’s 

FMV. As a result, the plan received less 

than it should have from the sale. 

(2) Correction of Transaction. The 

Principal Amount is the amount by 

which the FMV of the asset as of the 

Recovery Date exceeds the price at 

which the plan sold the property. The 

plan must receive the Principal Amount 

plus Lost Earnings as described in 

section 5(b). 

(i) The principles of paragraph (e)(2) 

of this section are illustrated in the 

following example: 

Example. A plan sold unimproved 

land without taking steps to ensure that 

the plan received FMV. Upon 

discovering that the sale price was 

$10,000 less than the FMV, the Plan 

Official pays the plan the Principal 

Amount of $10,000 plus Lost Earnings 

as described in section 5(b). 

(3) Documentation. In addition to the 

documentation required by section 6.1, 

submit the following documents: 


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(i) Documentation of the plan’s 

original sale of the asset, including the 

date of the sale, the sale price, and the 

identity of the buyer; 

(ii) A narrative describing the 

relationship of the buyer to the plan; 

and 

(iii) A copy of the qualified, 

independent appraiser’s report 

addressing the value at the time of the 

plan’s sale. 

(f) Holding of an Illiquid Asset 

Previously Purchased by a Plan 

(1) Description of Transaction. A plan 

is holding an asset previously 

purchased from (i) a party in interest 

with respect to the plan in an 

acquisition for which relief was 

available under a statutory or 

administrative prohibited transaction 

exemption, (ii) a party in interest with 

respect to the plan at no greater than 

FMV at that time in an acquisition to 

which no prohibited transaction 

exemption applied, (iii) a person who 

was not a party in interest with respect 

to the plan in an acquisition in which 

a plan fiduciary failed to appropriately 

discharge their fiduciary duties, or (iv) 

a person who was not a party in interest 

with respect to the plan in an 

acquisition in which a plan fiduciary 

appropriately discharged their fiduciary 

duties. Currently, a plan fiduciary 

determines that such asset is an illiquid 

asset because: (A) the asset failed to 

appreciate, failed to provide a 

reasonable rate of return, or caused a 

loss to the plan; (B) the sale of the asset 

is in the best interest of the plan; and 

(C) following reasonable efforts to sell 

the asset to a person who is not a party 

in interest with respect to the plan, the 

asset cannot immediately be sold for its 

original purchase price, or its current 

FMV, if greater. Examples of assets that 

may meet this definition include, but 

are not limited to, restricted and thinly 

traded stock, limited partnership 

interests, real estate and collectibles. In 

the case of an illiquid asset that is a 

parcel of real estate, no party in interest 

may own real estate that is contiguous 

to the plan’s parcel of real estate on the 

Recovery Date. 

(2) Correction of Transaction. (i) The 

transaction may be corrected by the sale 

of the asset to a party in interest, 

provided the plan receives the higher of 

(A) the FMV of the asset at the time of 

resale, without a reduction for the costs 

of sale; or (B) the Principal Amount, 

plus Lost Earnings as described in 

section 5(b). The Plan Official may 

cause the plan to sell the asset to a party 

in interest. This correction provides 

relief for both the original purchase of 

the asset, if required, and the sale of the 

illiquid asset by the plan to a party in 

interest; relief from the prohibited 

transaction excise tax also is provided if 

the Plan Official satisfies the applicable 

conditions of the VFC Program class 

exemption. 

(ii) For this transaction, the Principal 

Amount is (A) the amount that would 

have been available had the Breach not 

occurred, or (B) the plan’s original 

purchase price if the original purchase 

was not a prohibited transaction or 

imprudent. 

(iii) The principles of paragraph (f)(2) 

of this section are illustrated in the 

following examples: 

Example 1. A plan purchases 

undeveloped real property from a party 

in interest with respect to the plan for 

$60,000 in June 1999. In April 2004, 

Plan Officials determine that the 

property is an illiquid asset. A qualified, 

independent appraiser appraises the 

property at a current FMV of $20,000. 

The plan sponsor pays the plan the 

Principal Amount of $60,000 plus Lost 

Earnings as described in section 5(b), 

and Plan Officials transfer the property 

from the plan to the plan sponsor. The 

Plan Officials also comply with the 

applicable terms of the related 

exemption. 

Example 2. A plan purchases a 

limited partnership interest for $60,000 

in June 1999 from an unrelated party 

after plan fiduciaries properly fulfill 

their fiduciary duties with respect to the 

purchase. In April 2004, Plan Officials 

determine that the interest is an illiquid 

asset because the interest has failed to 

generate a reasonable rate of return. A 

qualified, independent appraiser 

appraises the interest at a current FMV 

of $80,000. The plan sponsor pays the 

plan the FMV of $80,000 without a 

reduction for the costs of the sale, which 

is greater than the Principal Amount 

plus Lost Earnings, and Plan Officials 

transfer the interest from the plan to the 

plan sponsor. The Plan Officials also 

comply with the applicable terms of the 

related exemption. 

(3) Documentation. In addition to the 

documentation required by section 6.1, 

submit the following documents: 

(i) Documentation of the plan’s 

original purchase of the asset, including 

the date of the purchase, the plan’s 

purchase price, the identity of the 

original seller, and a description of the 

relationship, if any, between the original 

seller and the plan; 

(ii) The qualified, independent 

appraiser’s report addressing the FMV 

of the asset purchased by the plan at the 

recovery date; 

(iii) A narrative describing the plan’s 

efforts to sell the asset to persons who 

are not parties in interest with respect 

to the plan and any documentation of 

such efforts to sell the asset; 

(iv) A statement from a Plan Official 

attesting that: (A) the asset failed to 

appreciate, failed to provide a 

reasonable rate of return, or caused a 

loss to the plan; (B) the sale of the asset 

is in the best interest of the plan; (C) the 

asset is an illiquid asset; and (D) the 

plan made reasonable efforts to sell the 

asset to persons who are not parties in 

interest with respect to the plan without 

success; and 

(v) In the case of an illiquid asset that 

is a parcel of real estate, a statement 

from a Plan Official attesting that no 

party in interest owns real estate that is 

contiguous to the plan’s parcel of real 

estate on the Recovery Date. 

7.5 Benefits 

(a) Payment of Benefits Without 

Properly Valuing Plan Assets on Which 

Payment Is Based 

(1) Description of Transaction. A 

defined contribution pension plan pays 

benefits based on the value of the plan’s 

assets. If one or more of the plan’s assets 

are not valued at current value, the 

benefit payments are not correct. If the 

plan’s assets are overvalued, the current 

benefit payments will be too high. If the 

plan’s assets are undervalued, the 

current benefit payments will be too 

low. 

(2) Correction of Transaction. (i) 

Establish the correct value of the 

improperly valued asset for each plan 

year, starting with the first plan year in 

which the asset was improperly valued. 

In the case of undervalued plan assets, 

restore to the plan for distribution to the 

affected plan participants, or restore 

directly to the plan participants, the 

amount by which all affected 

participants were underpaid 

distributions to which they were 

entitled under the terms of the plan, 

plus Lost Earnings as described in 

section 5(b) on the underpaid 

distributions. In the case of overvalued 

plan assets, restore to the plan the 

amount which exceeded the paid 

distribution amount to which all 

affected participants were entitled 

under the terms of the plan, plus Lost 

Earnings as described in section 5(b) on 

the overpaid distributions. File 

amended Annual Report Forms 5500, as 

detailed below. 

(ii) To correct the valuation defect, a 

Plan Official must determine the FMV 

of the improperly valued asset per 

section 5(a) for each year in which the 

asset was valued improperly. 

(iii) Once the FMV has been 

determined, the participant account 


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74See Advisory Opinion 2001–01A (Jan. 18, 

2001). 

balances for each year must be adjusted 

accordingly. 

(iv) The Annual Report Forms 5500 

must be amended and refiled for (A) the 

last three plan years or (B) all plan years 

in which the value of the asset was 

reported improperly, whichever is less. 

(v) The Plan Official or plan 

administrator must determine who 

received distributions from the plan 

during the time the asset was valued 

improperly. For distributions that were 

too low, the amount of the 

underpayment is treated as a Principal 

Amount for each individual who 

received a distribution. The Principal 

Amount and Lost Earnings must be paid 

to the affected individuals. For 

distributions that were too high, the 

total of the overpayments constitutes the 

Principal Amount for the plan. The 

Principal Amount plus the Lost 

Earnings, as described in section 5(b), 

must be restored to the plan or to any 

participants who received distributions 

that were too low. 

(vi) The principles of paragraph (a)(2) 

of this section are illustrated in the 

following examples: 

Example 1. On December 31, 1995, a 

profit-sharing plan purchased a 20-acre 

parcel of real property for $500,000, 

which represented a portion of the 

plan’s assets. The plan has carried the 

property on its books at cost, rather than 

at FMV. One participant left the 

company on January 1, 1997, and 

received a distribution, which included 

the participant’s portion of the value of 

the property. The separated 

participant’s account balance 

represented 2% of the plan’s assets. As 

part of the correction for the VFC 

Program, a qualified, independent 

appraiser has determined the FMV of 

the property for 1996, 1997, and 1998. 

The FMV as of December 31, 1996, was 

$400,000. Therefore, this participant 

was overpaid by $2,000 

(($500,000¥$400,000) multiplied by 

2%). The Plan Officials corrected the 

transaction by paying to the plan the 

$2,000 Principal Amount plus Lost 

Earnings as described in section 5(b). 

The plan administrator also filed an 

amended Form 5500 for plan years 1996 

and 1997, to reflect the proper values. 

The plan administrator will include the 

correct asset valuation in the 1998 Form 

5500 when that form is filed. 

Example 2. Assume the same facts as 

in Example 1, except that the property 

had appreciated in value to $600,000 as 

of December 31, 1996. The separated 

participant would have been underpaid 

by $2,000. The correction consists of 

locating the participant and distributing 

to the participant the $2,000 Principal 

Amount plus Lost Earnings as described 

in section 5(b), as well as filing the 

amended Forms 5500. 

(3) Documentation. In addition to the 

documentation required by section 6.1, 

submit the following documents: 

(i) A copy of the qualified, 

independent appraiser’s report for each 

plan year in which the asset was 

revalued; 

(ii) A written statement confirming 

the date that amended Annual Report 

Forms 5500 with correct valuation data 

were filed; 

(iii) If losses are restored to the plan, 

proof of payment to the plan and copies 

of the adjusted participant account 

balances; and 

(iv) If supplemental distributions are 

made, proof of payment to the 

individuals entitled to receive the 

supplemental distributions or to the 

plan if paid pursuant to the de minimis 

exception in section 5(e). 

7.6 Plan Expenses 

(a) Duplicative, Excessive, or 

Unnecessary Compensation Paid by a 

Plan 

(1) Description of Transaction. A plan 

used plan assets to pay compensation, 

including commissions or fees, to a 

service provider (such as an attorney, 

accountant, recordkeeper, actuary, 

financial adviser, or insurance agent), 

and the compensation was: 

(i) excessive in amount for the 

services provided to the plan; 

(ii) duplicative, in that a plan paid 

two or more providers for the same 

service; or 

(iii) unnecessary for the operation of 

the plan, in that the services were not 

helpful and appropriate in carrying out 

the purposes for which the plan is 

maintained. 

(2) Correction of Transaction. (i) 

Restore to the plan the Principal 

Amount, plus the greater of (A) Lost 

Earnings or (B) Restoration of Profits 

resulting from the use of the Principal 

Amount, as described in section 5(b). 

(ii) (A) For the transactions described 

in paragraph (a)(1)(i) above, the 

Principal Amount is the difference 

between (1) the amount of 

compensation paid by the plan to the 

service provider and (2) the reasonable 

market value of such services. 

(B) For the transactions described in 

paragraph (a)(1)(ii) above, the Principal 

Amount is the difference between (1) 

the total amount of compensation paid 

to the service providers and (2) the least 

amount of compensation paid to one of 

the service providers for the duplicative 

services. 

(C) For the transactions described in 

paragraph (a)(1)(iii) above, the Principal 

Amount is the amount of compensation 

paid by the plan to the service provider 

for the unnecessary services. 

(iii) The principles of paragraph (a)(2) 

of this section are illustrated in the 

following examples: 

Example 1. Excessive compensation. 

A plan hired an investment adviser who 

advised the plan’s trustees about how to 

invest the plan’s entire portfolio. In 

accordance with the plan document, the 

trustees instructed the adviser to limit 

the plan’s investments to equities and 

bonds. In exchange for the services, the 

plan paid the investment adviser 3% of 

the value of the portfolio’s assets. If the 

trustees had inquired, they would have 

learned that comparable investment 

advisers charged 1% of the value of the 

assets for the type of portfolio that the 

plan maintained. To correct the 

transaction, the plan must be paid the 

Principal Amount of 2% of the value of 

the plan’s assets, plus the higher Lost 

Earnings or Restoration of Profits, as 

described in section 5(b). 

Example 2. Unnecessary 

Compensation. A plan paid a travel 

agent to arrange a fishing trip for the 

plan’s investment adviser as a way of 

rewarding the adviser because the plan’s 

investment return for the year exceeded 

the plan’s investment goals by 10%. An 

internal auditor discovered the charge 

on the plan’s record books. To correct 

the transaction, the plan must be paid 

the Principal Amount, which is the total 

amount paid to the travel agent, plus the 

higher of Lost Earnings or Restoration of 

Profits as described in section 5(b). 

(3) Documentation. In addition to the 

documentation required by section 6.1, 

submit the following documents: 

(i) For the transactions described in 

paragraph (a)(1)(i) above, a written 

estimate of the reasonable market value 

of the services and the estimator’s 

qualifications; and 

(ii) The cost of the services at issue 

during the period that such services 

were provided to the plan. 

(b) Expenses Improperly Paid by a Plan 

(1) Description of Transaction. A plan 

used plan assets to pay expenses, 

including commissions or fees, which 

should have been paid by the plan 

sponsor, to a service provider (such as 

an attorney, accountant, recordkeeper, 

actuary, financial adviser, or insurance 

agent) for: 

(i) services provided in connection 

with the administration and 

maintenance of the plan (‘‘plan 

expenses’’ 74) in circumstances where a 


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75See id. 

plan provision requires that such plan 

expenses be paid by the plan sponsor, 

or 

(ii) services provided in connection 

with the establishment, design, or 

termination of the plan (‘‘settlor 

expenses’’ 75), which relate to the 

activities of the plan sponsor in its 

capacity as settlor. 

(2) Correction of Transaction. (i) 

Restore to the plan the Principal 

Amount, plus the greater of (A) Lost 

Earnings or (B) Restoration of Profits 

resulting from the use of the Principal 

Amount, as described in section 5(b). 

(ii) The Principal Amount is the entire 

amount improperly paid by the plan to 

the service provider for expenses that 

should have been paid by the plan 

sponsor. 

(iii) The principles of paragraph (b)(2) 

of this section are illustrated in the 

following example: 

Example. Employer X, the plan 

sponsor of Plan Y, is considering 

amending its defined contribution plan 

to add a 5% matching contribution. 

Employer X operates in a competitive 

industry, and a human resources 

consultant has recommended, among 

other improvements, that Employer X 

provide a competitive matching 

contribution to help attract and retain a 

highly qualified workforce. Employer X 

hired an actuary to estimate the cost of 

providing this matching contribution 

over the next ten years. In exchange for 

these services, the plan paid the actuary 

$10,000. Several months after the 

actuary’s bill has been paid, a Plan 

Official realizes that one of Employer 

X’s employees erroneously paid the bill 

from the defined contribution plan’s 

assets. The bill should have been paid 

by Employer X because the bill related 

to settlor expenses incurred by 

Employer X in analyzing whether to add 

a matching contribution to the plan. To 

correct the transaction, the plan must be 

paid the Principal Amount ($10,000), 

plus Lost Earnings or Restoration of 

Profits, as described in section 5(b). 

(3) Documentation. In addition to the 

documentation required by section 6.1, 

submit copies of the plan’s accounting 

records which show the date and 

amount of expenses paid by the plan to 

the service provider. 

(c) Payment of Dual Compensation to a 

Plan Fiduciary 

(1) Description of Transaction. A plan 

used plan assets to pay compensation to 

a fiduciary for services rendered to the 

plan when the fiduciary already 

receives full-time pay from an employer 

or an association of employers, whose 

employees are participants in the plan, 

or from an employee organization 

whose members are participants in the 

plan. The plan’s payments to the plan 

fiduciary are not reimbursements of 

expenses properly and actually incurred 

by the fiduciary in the performance of 

their fiduciary duties. 

(2) Correction of Transaction. (i) 

Restore to the plan the Principal 

Amount, plus the greater of (A) Lost 

Earnings or (B) Restoration of Profits 

resulting from the fiduciary’s use of the 

Principal Amount, as described in 

section 5(b). 

(ii) The Principal Amount is the 

amount of compensation paid to the 

fiduciary by the plan. 

(iii) The principles of paragraph (c)(2) 

of this section are illustrated in the 

following example: 

Example. A union sponsored a health 

plan funded through contributions by 

employers. The union president 

receives $50,000 per year from the 

union in compensation for services as 

union president. The president is 

appointed as a trustee of the health plan 

while retaining the position as union 

president. In exchange for acting as plan 

trustee, the union president is paid a 

salary of $200 per week by the plan 

while still receiving the $50,000 salary 

from the union. Since $50,000 is fulltime pay, the plan’s weekly salary 

payments are improper. To correct the 

transaction, the plan must be paid the 

Principal Amount, which is the $200 

weekly salary amount for each week 

that the salary was paid, plus the higher 

of Lost Earnings or Restoration of 

Profits, as described in section 5(b). 

(3) Documentation. In addition to the 

documentation required by section 6.1, 

submit copies of the plan’s accounting 

records which show the date and 

amount of compensation paid by the 

plan to the identified fiduciary. 

Appendix A—Sample VFC Program No 

Action Letter 

Applicant (Plan Official) 

Address 

Dear Applicant (Plan Official): 

Re: VFC Program Application No. xx– 

xxxxxx 

The Department of Labor, Employee 

Benefits Security Administration (EBSA), 

administers and enforces Title I of the 

Employee Retirement Income Security Act of 

1974 (ERISA). EBSA established a Voluntary 

Fiduciary Correction (VFC) Program to 

encourage the voluntary correction of 

breaches of fiduciary responsibility and the 

restoration of losses to the plan participants 

and beneficiaries. 

You submitted a VFC Program application 

identifying the following transactions as 

breaches, or potential breaches, of the 

fiduciary duty provisions in Part 4 of Title I 

of ERISA. You also submitted documentation 

to EBSA under the VFC Program on the 

corrective action you have taken. Your 

application was assigned the application 

number indicated above. 

[Briefly recap the transaction and 

correction. Example: Failure to deposit 

participant contributions to the XYZ Corp. 

401(k) plan within the time frames required 

by ERISA from (date) to (date). All 

participant contributions were deposited by 

(date) and Lost Earnings on the delinquent 

contributions were deposited and allocated 

to participants’ plan accounts on (date).] 

Based on your representations and the 

corrective actions taken, in accordance with 

the terms and limitations set forth in the VFC 

Program, EBSA will not recommend that the 

Solicitor of Labor initiate legal action against 

you, and EBSA will not seek to impose civil 

penalties under section 502(l) or section 

502(i) of ERISA with respect to the 

transactions described above. 

EBSA’s decision is conditioned on the 

representations in your VFC Program 

application being complete and accurate. The 

decision does not preclude EBSA from 

conducting an investigation of any potential 

violations of criminal law in connection with 

the transaction identified in the application 

or seeking appropriate relief from any other 

person. EBSA’s decision is binding on EBSA 

only, and does not bar other governmental 

agencies, plan fiduciaries, participants or 

beneficiaries, and other interested persons 

from seeking separate or additional remedies. 

[If the transaction is a prohibited 

transaction for which no exemptive relief is 

available, add the following language: The 

Secretary of Labor is required by section 

3003(c) of ERISA, 29 U.S.C. 1203(c), to 

transmit to the Secretary of the Treasury 

information indicating that a prohibited 

transaction has occurred. Accordingly, this 

matter will be referred to the Internal 

Revenue Service.] 

If you have any questions about this letter, 

you may contact the Regional VFC Program 

Coordinator at (insert applicable address and 

telephone number). 

Appendix B—VFC Program Application 

Checklist (Required) 

Use this checklist to make sure you are 

submitting a complete application. Indicate 

‘‘Yes’’, ‘‘No’’ or ‘‘N/A’’ next to each item. A 

‘‘No’’ answer or the failure to include a 

completed checklist will delay review of the 

application until all required items are 

received. The applicant must sign and date 

the checklist and include it with the 

application. Check with the relevant Regional 

Office whether it accepts email submissions 

of VFC Program applications. 

ll1. Have you reviewed the eligibility, 

definitions, transaction and correction, and 

documentation sections of the VFC Program? 

ll2. Have you included the name, address 

(street or email) and telephone number of a 

contact person familiar with the contents of 

the application? 

ll3. Have you provided the EIN, Plan 

Number, and address (street and email) of the 

plan sponsor and plan administrator? 

ll4. Have you provided the date that the 

most recent Form 5500 was filed by the plan 


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(or for a bulk application as described in 

section 4(d), the nine-digit employer 

identification number for each plan sponsor 

of a named plan)? 

ll5. Have you enclosed a signed and dated 

certification under penalty of perjury for the 

plan fiduciary with knowledge of the 

transactions and for each applicant and the 

applicant’s representative, if any? In the case 

of a bulk application, have you enclosed a 

signed and dated certification under penalty 

of perjury for the bulk applicant based on 

knowledge of the transactions and for the 

bulk applicant’s representative, if any? In the 

case of a contributing or adopting employer 

in a multiemployer plan or multiple 

employer plan, the employer may sign the 

Penalty of Perjury statement and, without 

regard to the employer’s status as a plan 

fiduciary, no other plan fiduciary need sign. 

ll6. Have you enclosed relevant portions 

of the plan document and any other pertinent 

documents (such as the adoption agreement, 

trust agreement, or insurance contract) with 

the relevant sections identified? 

ll7. If applicable, have you provided 

written notification to EBSA of any current 

investigation or examination of the plan, or 

of the applicant or plan sponsor in 

connection with an act or transaction directly 

related to the plan by the PBGC, any state 

attorney general, or any state insurance 

commissioner? 

ll8. If applicable (under section 4(b)(2) of 

the Program), have you included the 

following items? 

lla. Contact information for the law 

enforcement agency notified of the criminal 

activity; 

llb. A statement from the applicant 

asserting no involvement in the potential 

criminal activity; and 

llc. A statement as to whether a claim 

relating to the criminal activity has been 

made under an ERISA section 412 fidelity 

bond. 

ll9. Where applicable, have you enclosed 

a copy of an appraiser’s report? 

ll10. Where applicable, have you enclosed 

a copy of an independent fiduciary’s 

approval? 

ll11. Have you enclosed supporting 

documentation, including: 

lla. A detailed narrative of the Breach, 

including the date it occurred; 

llb. Documentation that supports the 

narrative description of the transaction; 

llc. An explanation of how the Breach was 

corrected, by whom and when, with 

supporting documentation; 

lld. A list of all persons materially 

involved in the Breach and its correction 

(e.g., fiduciaries, service providers, 

borrowers, lenders); 

lle. Specific calculations demonstrating 

how Principal Amount and Lost Earnings or 

Restoration of Profits were computed, or, if 

the Online Calculator was used, a copy of the 

‘‘Print Viewable Results’’ page(s) after 

completing use of the Online Calculator; 

llf. Proof of payment of principal amount; 

llg. Proof of payment of Lost Earnings or 

restoration of profits to the plan; and 

Caution: The correction amount and the 

costs of correction cannot be paid from plan 

assets, including by charges against 

participant accounts or plan forfeiture 

accounts. 

llh. If application concerns delinquent 

participant contributions or loan repayments, 

a statement from a Plan Official identifying 

the earliest date on which participant 

contributions/loan repayments reasonably 

could have been segregated from the 

employer’s general assets and supporting 

documentation on which the Plan Official 

relied? 

ll12. If you are an eligible applicant and 

wish to avail yourself of excise tax relief 

under the VFC Program Class Exemption: 

lla. Have you made proper arrangements 

to provide within 60 calendar days after 

submission of this application a copy of the 

VFC Program Class Exemption notice to all 

interested persons and to the EBSA Regional 

Office to which the application is filed; or 

llb. If you are relying on the exception to 

the notice requirement in section IV.C. of the 

VFC Program Class Exemption because the 

amount of the excise tax otherwise due 

would be less than or equal to $100.00, have 

you provided to the appropriate EBSA 

Regional Office a copy of a completed IRS 

Form 5330 or other written documentation 

containing the information required by IRS 

Form 5330 and proof of payment? 

ll13. In calculating Lost Earnings, have 

you elected to use: 

lla. The Online Calculator; or 

llb. A manual calculation performed in 

accordance with section 5(b) of the VFC 

Program? 

ll14. If the application involves payments 

to participants and beneficiaries: 

lla. Have you enclosed a description 

demonstrating proof of payment to 

participants and beneficiaries whose current 

location is known to the plan and/or 

applicant in accordance with section 5(d) of 

the VFC Program? 

llb. For individuals who need to be 

located, have you demonstrated how 

adequate funds have been segregated to pay 

missing individuals and included a 

description of the process that you 

commenced to locate missing individuals in 

accordance with section 5(d)? 

ll15. For purposes of the three transactions 

involving participant contributions covered 

under section 7.1, has the plan implemented 

measures to ensure that such transactions do 

not recur? 

Signature of Applicant and Date Signed: 

lllllllllllllllllllll

Name of Applicant: 

lllllllllllllllllllll

Title/Relationship to the Plan: 

lllllllllllllllllllll

Name of Plan, EIN and Plan Number: 

lllllllllllllllllllll

lllllllllllllllllllll

Contact information: Phone; email: 

lllllllllllllllllllll

Paperwork Reduction Act Notice 

The information identified on this form is 

required for a valid application for the 

Voluntary Fiduciary Correction Program of 

the U.S. Department of Labor’s Employee 

Benefits Security Administration (EBSA). 

You must complete this form and submit it 

as part of the application in order to receive 

the relief offered under the Program with 

respect to a breach of fiduciary responsibility 

under Part 4 of Title I of ERISA. EBSA will 

use this information to determine that you 

have satisfied the requirements of the 

Program. EBSA estimates that completing 

and submitting this form will require an 

average of 2 to 4 minutes. This collection of 

information is currently approved under 

OMB Control Number 1210–0118. You are 

not required to respond to a collection of 

information unless it displays a currently 

valid OMB Control Number. 

Appendix C—EBSA Regional Offices 

Submit your VFC Program application to 

the appropriate EBSA Regional Office. Verify 

current telephone numbers and addresses on 

EBSA’s website, www.dol.gov/ebsa/ before 

you submit your application. Check with the 

relevant Regional Office on whether it 

accepts email submissions of VFC Program 

applications. 

Atlanta Regional Office, 61 Forsyth Street 

SW, Suite 7B54, Atlanta, GA 30303, 

telephone (404) 302–3900, fax (404) 302– 

3975; jurisdiction: Alabama, Florida, Georgia, 

Mississippi, North Carolina, South Carolina, 

Tennessee, Puerto Rico. 

Boston Regional Office, J.F.K. Federal 

Building, 15 New Sudbury Street, Room 575, 

Boston, MA 02203, telephone (617) 565– 

9600, fax: (617) 565–9666; jurisdiction: 

Connecticut, Maine, Massachusetts, New 

Hampshire, central and western New York, 

Rhode Island, Vermont. 

Chicago Regional Office, John C. 

Kluczynski Federal Building, 230 South 

Dearborn Street, Suite 2160, Chicago, IL 

60604, telephone (312) 353–0900, fax (312) 

353–1023; jurisdiction: northern Illinois, 

northern Indiana, Wisconsin. 

Cincinnati Regional Office, 1885 Dixie 

Highway, Suite 210, Ft. Wright, KY 41011– 

2664, telephone (859) 578–4680, fax (859) 

578–4688; jurisdiction: southern Indiana, 

Kentucky, Michigan, Ohio. 

Dallas Regional Office, 525 South Griffin 

Street, Rm. 900, Dallas, TX 75202–5025, 

telephone (972) 850–4500, fax (214) 767– 

1055; jurisdiction: Arkansas, Louisiana, New 

Mexico, Oklahoma, Texas. 

Kansas City Regional Office, 2300 Main 

Street, Suite 1100, Kansas City, MO 64108, 

telephone (816) 285–1800, fax (816) 285– 

1888; jurisdiction: Colorado, southern 

Illinois, Iowa, Kansas, Minnesota, Missouri, 

Montana, Nebraska, North Dakota, South 

Dakota, Wyoming. 

Los Angeles Regional Office, 35 N Lake 

Ave., Suite 300, Pasadena, CA 91101, 

telephone (626) 229–1000, fax (626) 229– 

1098; jurisdiction: 10 southern counties of 

California, Arizona, Hawaii, American 

Samoa, Guam, Wake Island. 

New York Regional Office, 201 Varick 

Street, Room 746, New York, NY 10014, 

telephone (212) 607–8600, fax (212) 607– 

8611; jurisdiction: southeastern New York, 

northern New Jersey. 

Philadelphia Regional Office, 1835 Market 

Street, 21st Floor, Mailstop EBSA/21, 

Philadelphia, PA 19103, telephone (215) 

861–5300, fax (215) 861–5347; jurisdiction: 

Delaware, Maryland, southern New Jersey, 


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Pennsylvania, Virginia, Washington, DC, 

West Virginia. 

San Francisco Regional Office, 90 7th 

Street, Suite 11–300, San Francisco, CA 

94103, telephone (415) 625–2481, fax (415) 

625–2450; jurisdiction: Alaska, 48 northern 

counties of California, Idaho, Nevada, 

Oregon, Utah, Washington. 

Appendix D—Lost Earnings Example 

(Manual Calculation) 

Delinquent Participant Contributions 

Company A pays its employees every other 

Friday. Each pay date, participant 

contributions total $10,000, which 

reasonably can be segregated from Company 

A’s general assets by ten business days 

following each pay date. Company A should 

have remitted participant contributions for 

the pay date ending March 2, 2001 to the 

plan by March 16, 2001, the Loss Date, but 

actually remitted them on April 13, 2001, the 

Recovery Date. In early 2004, a Plan Official 

discovers that participant contributions for 

this pay period were not remitted on a timely 

basis. To comply with the Program, the Plan 

Official decided to repay all Lost Earnings on 

January 30, 2004. 

Based on the above facts: 

• Principal Amount is $10,000 

• Loss Date is March 16, 2001 

• Recovery Date is April 13, 2001 

• Number of Days Late is 28 (Recovery Date 

less Loss Date) 

The basic formula for computing earnings 

using the applicable factors under IRS 

Revenue Procedure 95–17 is: Dollar Amount 

* IRS factor. 

Step 1. The Plan Official must calculate 

Lost Earnings, based on the Principal 

Amount, that should have been paid on the 

Recovery Date. 

The first period of time is from March 16, 

2001 to March 31, 2001 (15 days). The Code 

underpayment rate is 9%. Using Revenue 

Procedure 95–17, the factor for 15 days at 9% 

is 0.003705021 from table 23. 

$10,000 * 0.003705021 = $37.05 

The plan is due $10,037.05 as of March 31, 

2001. The second period of time is April 1, 

2001 through April 13, 2001 (13 days). The 

Code underpayment rate is 8%. Using 

Revenue Procedure 95–17, the factor for 13 

days at 8% is 0.002853065 from table 21. 

$10,037.05 * 0.002853065 = $28.64 

Therefore, Lost Earnings of $65.69 ($37.05 

plus $28.64) must be paid to the plan. 

Step 2. If Lost Earnings are paid to the plan 

after the Recovery Date, the Plan Official 

must calculate the amount of interest on the 

Lost Earnings (determined in Step 1) that 

must also be paid to the plan. This 

calculation is shown by the following chart: 

(The ‘‘Interest’’ column is the previous time 

period’s ‘‘Amnt. Due’’ multiplied by the 

Factor. ‘‘Amnt. Due’’ is the previous ‘‘Amnt. 

Due’’ plus ‘‘Interest’’. The calculation in the 

first row is based on the $65.69 Lost 

Earnings.) 

1st day To Days 

Underpmnt. 

rate 

(%) 

Rev. proc. 

table Factor Interest Amnt. due 

4/14/01 ............................................. 6/30/01 78 8 21 .017240956 1.132558 66.82256 

7/1/01 ............................................... 9/30/01 92 7 19 .017798686 1.189354 68.01191 

10/1/01 ............................................. 12/31/01 92 7 19 .017798686 1.210523 69.22243 

1/1/02 ............................................... 3/31/02 90 6 17 .014903267 1.031640 70.25408 

4/1/02 ............................................... 6/30/02 91 6 17 .015070101 1.058736 71.31281 

7/1/02 ............................................... 9/30/02 92 6 17 .015236961 1.086591 72.39940 

10/1/02 ............................................. 12/31/02 92 6 17 .015236961 1.103147 73.50255 

1/1/03 ............................................... 3/31/02 90 5 15 .012404225 0.911742 74.41429 

4/1/03 ............................................... 6/30/03 91 5 15 .012542910 0.933372 75.34766 

7/1/03 ............................................... 9/30/03 92 5 15 .012681615 0.955530 76.30319 

10/1/03 ............................................. 12/31/03 92 4 13 .010132630 0.773152 77.07634 

1/1/04 ............................................... 1/30/04 30 4 61 .003283890 0.253110 77.32945 

Total Interest ..................................................................................................................................................... 11.64 ........................

Note that the last factor comes from the 

Revenue Procedure 95–17 tables for leap 

years. The plan is also owed $11.64. This is 

the amount of interest on $65.69 (Lost 

Earnings on the Principal Amount) accrued 

between April 13, 2001, the Recovery Date, 

when the Principal Amount $10,000 was 

paid to the plan, and January 30, 2004, the 

date chosen to repay Lost Earnings. 

Therefore, the Plan Official must pay 

$77.33 to the plan on January 30, 2004, as 

Lost Earnings ($65.69) plus interest on Lost 

Earnings ($11.64) for the pay period ending 

March 2, 2001, in addition to the Principal 

Amount ($10,000) that was paid on April 13, 

2001. This total corresponds with the final 

Total Due in the above chart (emphasized). 

Appendix E—Model Application Form 

(Optional) 

Voluntary Fiduciary Correction Program 

Application Form 

This application form provides a 

recommended format for your VFC Program 

application. Please make sure you have 

attached all documents identified on the VFC 

Program Checklist (for example, proof of 

payment). If you choose to use a different 

format to submit the required information for 

your VFC Program Application, your 

application must still include a completed 

copy of the VFC Program Checklist. Submit 

your application to the appropriate EBSA 

Regional Office. Check with the relevant 

Regional Office whether it accepts email 

submissions of VFC Program applications. 

For full application procedures, consult 

www.dol.gov/ebsa/. 

Applicant Name(s) and Address(es) (street 

and email) 

List separately: 

lllllllllllllllllllll

lllllllllllllllllllll

lllllllllllllllllllll

List Transaction(s) Corrected 

Check which transaction(s) listed in the 

VFC Program you have corrected: 

llDelinquent Participant Contributions 

and Loan Repayments to Pension Plans 

llDelinquent Participant Contributions to 

Insured Welfare Plans 

llDelinquent Participant Contributions to 

Welfare Plan Trusts 

llLoan at Fair Market Interest Rate to a 

Party in Interest 

llLoan at Below-Market Interest Rate to a 

Party in Interest 

llLoan at Below-Market Interest Rate to a 

Non-Party in Interest 

llLoan at Below-Market Interest Rate Due 

to Delay in Perfecting Plan’s Security 

Interest 

llLoans Failing to Comply with Plan 

Provisions for Amount, Duration or Level 

Amortization 

llDefault Loans 

llPurchase of an Asset by a Plan from a 

Party in Interest 

llSale of an Asset by a Plan to a Party in 

Interest 

llSale and Leaseback of Real Property to 

Employer 

llPurchase of Asset by a Plan from a NonParty in Interest at More Than Fair Market 

Value 

llSale of an Asset by a Plan to a Non-Party 

in Interest at Less Than Fair Market Value 

llHolding of an Illiquid Asset Previously 

Purchased by a Plan 

llPayment of Benefits Without Properly 

Valuing Plan Assets on Which Payment is 

Based 

llDuplicative, Excessive, or Unnecessary 

Compensation Paid by a Plan 

llExpenses Improperly Paid by a Plan 

llPayment of Dual Compensation to a Plan 

Fiduciary 

Correction Amount 

Principal Amount: $ llllll 


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Federal Register / Vol. 90, No. 9 / Wednesday, January 15, 2025 / Rules and Regulations 4229 

Date Paid l/l/l 

Lost Earnings/Restoration of Profit: $ 

llllll 

Date Paid l/l/l 

Narrative and Calculations 

List: 

(1) All persons materially involved in the 

Breach and its correction (e.g., fiduciaries, 

service providers): 

lllllllllllllllllllll

lllllllllllllllllllll

lllllllllllllllllllll

(2) An explanation of the Breach, including 

the date(s) it occurred (attach separate sheets 

if necessary): 

lllllllllllllllllllll

lllllllllllllllllllll

lllllllllllllllllllll

(3) An explanation of how the Breach was 

corrected, by whom, and when (attach 

separate sheets if necessary): 

lllllllllllllllllllll

lllllllllllllllllllll

lllllllllllllllllllll

(4) For a correction of Delinquent 

Participant Contributions or Loan 

Repayments, provide a statement from a Plan 

Official identifying the earliest date on which 

participant contributions/loan repayments 

reasonably could have been segregated from 

the employer’s general assets (attach 

supporting documentation on which Plan 

Official relied). 

Number of days used to determine the date 

on which participant contributions/loan 

repayments withheld from employees’ pay 

could reasonably have been segregated from 

the employer’s general assets: 

lllllllllllllllllllll

lllllllllllllllllllll

Description of how this date was 

determined, including the applicant’s current 

contribution and/or repayment remittance 

practices: 

lllllllllllllllllllll

lllllllllllllllllllll

lllllllllllllllllllll

(5) For a correction of Delinquent 

Participant Contributions or Loan 

Repayments, provide a narrative describing 

any changes to the applicant’s contribution 

and/or repayment remittance practices after 

the period of unpaid or late contributions 

and/or repayments, including any steps taken 

to prevent future delinquencies: (attach 

separate sheets if necessary) 

lllllllllllllllllllll

lllllllllllllllllllll

lllllllllllllllllllll

(6) Specific calculations demonstrating 

how Principal Amount and Lost Earnings or 

Restoration of Profits were calculated (attach 

separate sheets if necessary): If the Online 

Calculator was used, you only need to 

indicate this and attach a copy of the ‘‘View 

Printable Results’’ page. 

llOnline Calculator—‘‘View Printable 

Results’’ page attached. 

llManual calculation—see attached 

calculations, which must follow the method 

used in subparagraphs (i) through (iv) of 

section 5(b)(6). See Appendix D for a sample. 

Supplemental Information 

(1) Plan Sponsor Name: 

lllllllllllllllllllll

EIN: llllllllllllllllll

Address: llllllllllllllll

(2)(a) Plan Name: 

lllllllllllllllllllll

Plan Number: llllllllllllll

(2)(b) For Bulk Applicants (attach 

additional sheets identifying this information 

for each Plan named in the application 

involved in the transaction): 

Plan Name: lllllllllllllll

Plan Sponsor EIN or date the most recent 

Form 5500 was filed: llllll 

(3) Plan Administrator Name: 

lllllllllllllllllllll

EIN: llllllllllllllllll

Address: llllllllllllllll

(4) Name of Authorized Representative: 

(Submit written authorization signed by the 

Plan Official.) 

lllllllllllllllllllll

Address: llllllllllllllll

Telephone: lllllllllllllll

(5) Name of Contact Person: 

lllllllllllllllllllll

Address: llllllllllllllll

Telephone: lllllllllllllll

Email: lllllllllllllllll

(6) Date of Most Recent Annual Report 

Form 5500 Filing, if applicable: l/l/l for 

Plan Year Ending: l/l/l 

(7) Is Applicant Seeking Relief From Excise 

Tax Under PTE 2002–51? 

llYes—Either: 

llSubmit a copy of the notice to 

interested parties within 60 calendar 

days of this application and indicate date 

of the notice if not on the notice itself; 

or 

llIf you are relying on the exception to 

the notice requirement contained in 

section IV.C. of PTE 2002–51, provide a 

copy of a completed IRS Form 5330 or 

other written documentation and proof 

of payment. 

llNo. 

(8) Proof of Payment: 

llCanceled check 

llExecuted wire transfer 

llSigned, dated receipt from the recipient 

of funds transferred to the plan (such as a 

financial institution) 

llBank statements for the plan’s account 

llOther: llllll 

Caution: The correction amount and the 

costs of correction cannot be paid from plan 

assets, including by charges against 

participant accounts or plan forfeiture 

accounts. 

(9) Disclosure of a current investigation or 

examination of the plan by an agency, to 

comply with section 3(b)(3)(v): 

llPBGC 

llAny state attorney general 

llState: llllll 

llAny state insurance commissioner 

llState: llllll 

llOther federal governmental agency: 

llllll 

llContact person for the agency identified: 

llllll 

(10) Be sure to include the required VFC 

Program Application Checklist and all other 

documentation identified as being enclosed. 

The checklist is available at http://

www.dol.gov/ebsa/calculator/2006vfcp

checklist.html. 

(11) In order to help us improve our 

service, please indicate how you learned 

about the VFC Program: llllll 

Authorization of Representative 

I have authorized (insert name of 

authorized representative) to represent me 

concerning this VFC Program application. 

Name of Plan Official 

lllllllllllllllllllll

Signature of Plan Official 

lllllllllllllllllllll

Date llllllllllllllllll

Penalty of Perjury Statement 

The following statement must be signed 

and dated by a plan fiduciary, (or pursuant 

to special rules, a bulk applicant or an 

employer with respect to a multiemployer 

plan or multiple employer plan), with 

knowledge of the transaction that is the 

subject of the application and by the 

authorized representative, if any. Each Plan 

Official applying under the VFC Program 

must also sign and date the statement, which 

must accompany any subsequent additions to 

the application. 

‘‘Under penalties of perjury I certify that I 

am not Under Investigation (as defined in 

section 3(b)(3) of the VFC Program) and that 

I have reviewed this application, including 

all supporting documentation, and to the best 

of my knowledge and belief the contents are 

true, correct, and complete.’’ 

lllllllllllllllllllll

Name and Title 

Signature llllllllllllllll

Date llllllllllllllllll

Name and Title 

Signature llllllllllllllll

Date llllllllllllllllll

Paperwork Reduction Act Notice 

The information identified on this form is 

required for a valid application for the 

Voluntary Fiduciary Correction Program of 

the U.S. Department of Labor’s Employee 

Benefits Security Administration (EBSA). 

You are not required to use this form; 

however, you must supply the information 

identified in order to receive the relief 

offered under the Program with respect to a 

breach of fiduciary responsibility under Part 

4 of Title I of ERISA. EBSA will use this 

information to determine whether you have 

satisfied the requirements of the Program. 

EBSA estimates that assembling and 

submitting this information will require an 

average of 7 hours. This collection of 

information is currently approved under 

OMB Control Number 1210–0118. You are 

not required to respond to a collection of 

information unless it displays a currently 

valid OMB Control Number. 

VFC Program Application Checklist 

(Required) 

Use this checklist to make sure you are 

submitting a complete application. Indicate 

‘‘Yes’’, ‘‘No’’ or ‘‘N/A’’ next to each item. A 

‘‘No’’ answer or the failure to include a 

completed checklist will delay review of the 


lotter on DSK11XQN23PROD with RULES3
4230 Federal Register / Vol. 90, No. 9 / Wednesday, January 15, 2025 / Rules and Regulations 

application until all required items are 

received. The applicant must sign and date 

the checklist and include it with the 

application. Check with the relevant Regional 

Office whether it accepts email submissions 

of VFC Program applications. 

ll1. Have you reviewed the eligibility, 

definitions, transaction and correction, and 

documentation sections of the VFC Program? 

ll2. Have you included the name, address 

(street or email) and telephone number of a 

contact person familiar with the contents of 

the application? 

ll3. Have you provided the EIN, Plan 

Number, and address (street and email) of the 

plan sponsor and plan administrator? 

ll4. Have you provided the date that the 

most recent Form 5500 was filed by the plan 

(or for a bulk application as described in 

section 4(d), the nine-digit employer 

identification number for each plan sponsor 

of a named plan)? 

ll5. Have you enclosed a signed and dated 

certification under penalty of perjury for the 

plan fiduciary with knowledge of the 

transactions and for each applicant and the 

applicant’s representative, if any? In the case 

of a bulk application, have you enclosed a 

signed and dated certification under penalty 

of perjury for the bulk applicant based on 

knowledge of the transactions and for the 

bulk applicant’s representative, if any? In the 

case of a contributing or adopting employer 

in a multiemployer plan or multiple 

employer plan, the employer may sign the 

Penalty of Perjury statement and, without 

regard to the employer’s status as a plan 

fiduciary, no other plan fiduciary need sign. 

ll6. Have you enclosed relevant portions 

of the plan document and any other pertinent 

documents (such as the adoption agreement, 

trust agreement, or insurance contract) with 

the relevant sections identified? 

ll7. If applicable, have you provided 

written notification to EBSA of any current 

investigation or examination of the plan, or 

of the applicant or plan sponsor in 

connection with an act or transaction directly 

related to the plan by the PBGC, any state 

attorney general, or any state insurance 

commissioner? 

ll8. If applicable (under section 4(b)(2) of 

the Program), have you included the 

following items? 

lla. Contact information for the law 

enforcement agency notified of the criminal 

activity; 

llb. A statement from the applicant 

asserting no involvement in the potential 

criminal activity; and 

llc. A statement as to whether a claim 

relating to the criminal activity has been 

made under an ERISA section 412 fidelity 

bond. 

ll9. Where applicable, have you enclosed 

a copy of an appraiser’s report? 

ll10. Where applicable, have you enclosed 

a copy of an independent fiduciary’s 

approval? 

ll11. Have you enclosed supporting 

documentation, including: 

lla. A detailed narrative of the Breach, 

including the date it occurred; 

llb. Documentation that supports the 

narrative description of the transaction; 

llc. An explanation of how the Breach was 

corrected, by whom and when, with 

supporting documentation; 

lld. A list of all persons materially 

involved in the Breach and its correction 

(e.g., fiduciaries, service providers, 

borrowers, lenders); 

lle. Specific calculations demonstrating 

how Principal Amount and Lost Earnings or 

Restoration of Profits were computed, or, if 

the Online Calculator was used, a copy of the 

‘‘Print Viewable Results’’ page(s) after 

completing use of the Online Calculator; 

llf. Proof of payment of principal amount; 

llg. Proof of payment of Lost Earnings or 

restoration of profits to the plan; and 

Caution: The correction amount and the 

costs of correction cannot be paid from plan 

assets, including by charges against 

participant accounts or plan forfeiture 

accounts. 

llh. If application concerns delinquent 

participant contributions or loan repayments, 

a statement from a Plan Official identifying 

the earliest date on which participant 

contributions/loan repayments reasonably 

could have been segregated from the 

employer’s general assets and supporting 

documentation on which the Plan Official 

relied? 

ll12. If you are an eligible applicant and 

wish to avail yourself of excise tax relief 

under the VFC Program Class Exemption: 

lla. Have you made proper arrangements 

to provide within 60 calendar days after 

submission of this application a copy of the 

VFC Program Class Exemption notice to all 

interested persons and to the EBSA Regional 

Office to which the application is filed; or 

llb. If you are relying on the exception to 

the notice requirement in section IV.C. of the 

VFC Program Class Exemption because the 

amount of the excise tax otherwise due 

would be less than or equal to $100.00, have 

you provided to the appropriate EBSA 

Regional Office a copy of a completed IRS 

Form 5330 or other written documentation 

containing the information required by IRS 

Form 5330 and proof of payment? 

ll13. In calculating Lost Earnings, have 

you elected to use: 

lla. The Online Calculator; or 

llb. A manual calculation performed in 

accordance with section 5(b) of the VFC 

Program? 

ll14. If the application involves payments 

to participants and beneficiaries: 

lla. Have you enclosed a description 

demonstrating proof of payment to 

participants and beneficiaries whose current 

location is known to the plan and/or 

applicant in accordance with section 5(d) of 

the VFC Program? 

llb. For individuals who need to be 

located, have you demonstrated how 

adequate funds have been segregated to pay 

missing individuals and included a 

description of the process that you 

commenced to locate missing individuals in 

accordance with section 5(d)? 

ll15. For purposes of the three transactions 

involving participant contributions covered 

under section 7.1, has the plan implemented 

measures to ensure that such transactions do 

not recur? 

Signature of Applicant and Date Signed: 

lllllllllllllllllllll

Name of Applicant: 

lllllllllllllllllllll

Title/Relationship to the Plan: 

lllllllllllllllllllll

Name of Plan, EIN and Plan Number: 

lllllllllllllllllllll

lllllllllllllllllllll

Contact information: Phone; email 

lllllllllllllllllllll

Paperwork Reduction Act Notice 

The information identified on this form is 

required for a valid application for the 

Voluntary Fiduciary Correction Program of 

the U.S. Department of Labor’s Employee 

Benefits Security Administration (EBSA). 

You must complete this form and submit it 

as part of the application in order to receive 

the relief offered under the Program with 

respect to a breach of fiduciary responsibility 

under Part 4 of Title I of ERISA. EBSA will 

use this information to determine that you 

have satisfied the requirements of the 

Program. EBSA estimates that completing 

and submitting this form will require an 

average of 2 to 4 minutes. This collection of 

information is currently approved under 

OMB Control Number 1210–0118. You are 

not required to respond to a collection of 

information unless it displays a currently 

valid OMB Control Number. 

Appendix F—SCC Retention Record 

Checklist 

Delinquent Participant Contributions or 

Loan Repayments 

A self-corrector must complete this 

checklist, prepare or collect the listed 

documents and provide a copy of the 

completed checklist and the required 

documentation to the plan administrator 

(generally the plan sponsor/employer) to 

obtain relief under the SCC. 

llDid you attach a brief statement 

explaining why the employer retained the 

participant contributions or loan repayments 

instead of timely forwarding such amounts to 

the plan (the Breach). 

llDid you attach proof of payment, such 

as canceled checks, executed wire transfers, 

bank statements for the plan’s account, or 

other documents showing the actual date the 

plan received the corrective payment(s)? If 

you paid the total amount of delinquent 

contributions and loan repayments (Principal 

Amount) separately from the total amount of 

earnings (Lost Earnings) that would have 

been earned on the Principal Amount but for 

the delinquency, make sure to attach proof of 

payment of both amounts. (Caution—Plan 

Assets, including charges to participant 

accounts or plan forfeiture accounts, cannot 

be used to pay the correction amount or the 

costs of correction); 

llDid you attach other documents (if 

any) to support proof of payment, such as 

offsetting overpayments or annotations that 

provide a clear record of the correction? 

llDid you attach a copy of the page(s) 

that results from the ‘‘View Printable 

Results’’ function of the Online Calculator? 

Self-correctors must use the Online 

Calculator to determine Lost Earnings and 


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print a copy of the ‘‘View Printable Results’’ 

page. 

llDid you attach a statement describing 

policies and procedures (if any) that the 

employer put into place to prevent future 

delinquencies of participant contributions or 

loan repayments? 

llDid you attach a copy of the SCC 

Notice Acknowledgement and Summary page 

that you received from EBSA after 

submission of the SCC notice? 

llDid a plan fiduciary and each plan 

official seeking relief complete the following 

Penalty of Perjury Statement and provide the 

signed statement to the plan administrator? 

Penalty of Perjury Statement—The 

following statement must be signed and 

dated by a plan fiduciary with knowledge of 

the transaction that is the subject of the SCC 

notice and by the authorized representative, 

if any. Each plan official who is seeking the 

relief afforded under the SCC must also sign 

and date the statement, which must be 

retained by the plan administrator. (In the 

case of a contributing or adopting employer 

in a multiemployer plan or multiple 

employer plan, the employer may sign the 

Penalty of Perjury statement and, without 

regard to the employer’s status as a plan 

fiduciary, no other plan fiduciary need sign.) 

Under penalties of perjury I certify that I 

am not Under Investigation (as defined in 

VFC Program section 3(b)(3)) and that I have 

reviewed the SCC notice acknowledgement 

and summary, the checklist and all the 

required documentation, and to the best of 

my knowledge and belief the contents are 

true, correct, and complete. 

Name and Title lllllllllllll

Signature llllllllllllllll

Date llllllllllllllllll

Name and Title lllllllllllll

Signature llllllllllllllll

Date llllllllllllllllll

llDid a plan official complete the 

following authorization, if an authorized 

preparer was used to submit the SCC notice? 

Authorization of Plan Official 

I have authorized llllll to submit 

the VFCP SCC notice. 

Name of Plan Official llllllllll

Signature llllllllllllllll

Date llllllllllllllllll

Paperwork Reduction Act Notice 

The information identified on this form is 

required for a valid use of the Self-Correction 

Component for Delinquent Participant 

Contributions or Loan Repayments of the 

Voluntary Fiduciary Correction Program of 

the U.S. Department of Labor’s Employee 

Benefits Security Administration (EBSA). 

You must complete this form and provide a 

copy of the completed checklist and the 

required documentation to the plan 

administrator to receive the relief under the 

Self-Correction Component of the Program 

with respect to the breach of fiduciary 

responsibility under Part 4 of Title I of ERISA 

associated with the delinquent participant 

contributions or loan repayments. EBSA may 

request a copy of this information to 

determine that you have satisfied the 

requirements of the Self-Correction 

Component of the Program. EBSA estimates 

assembling this information will require an 

average of 4 hours and completing this form 

will require an average of 2 to 4 minutes. 

This collection of information is currently 

approved under OMB Control Number 1210– 

0118. You are not required to respond to a 

collection of information unless it displays a 

currently valid OMB Control Number. 

Signed at Washington, DC, this 3rd day of 

January 2025. 

Lisa M. Gomez, 

Assistant Secretary, Employee Benefits 

Security Administration, U.S. Department of 

Labor. 

[FR Doc. 2025–00327 Filed 1–14–25; 8:45 am] 

BILLING CODE 4510–29–P 


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