Fixing a plan mistake before the DOL finds it.
The Department of Labor runs a program that lets plan officials voluntarily correct certain ERISA fiduciary breaches. For an employer that finds a problem, it is worth knowing the program exists before an agency contact forces the issue.
What the program is.
A Voluntary Correction Path
The Voluntary Fiduciary Correction Program, run by the Employee Benefits Security Administration, encourages plan officials to correct breaches of fiduciary responsibility and restore losses to the plan. Participation is voluntary, and the program has its own application steps and conditions. Employers considering it should talk to benefits counsel first, since the facts of each situation differ. Our free voluntary benefits payroll calculator turns this into dollars for your plan.
What You Get
When a correction meets the program’s requirements, EBSA issues a no action letter. It states the agency will not take civil enforcement action on that breach or impose the related ERISA penalties on the amount repaid. The letter applies to the breach that was corrected through the program, not to unrelated issues. Ask counsel what it covers in your situation and how to keep it with your plan records.
Conditional Tax Relief
The program also provides conditional relief from certain excise taxes when corrections are made through it. Tax relief depends on meeting the program’s conditions and on the type of transaction involved. Ask your tax adviser or benefits counsel whether any excise tax issue applies to your situation.
Recently Updated
EBSA announced updates to the program with an effective date of March 17, 2025. Confirm the current version before relying on any detail here. Program details can change, so check the agency’s current instructions or ask counsel before relying on a summary. A correction started under outdated steps may need to be redone.
What plan sponsors can do.
Spot The Issue Early
Late remittance of employee contributions, using plan money for company expenses and similar problems are the kinds of items fiduciaries should look for in their own records. Compare payroll dates against deposit dates, and check plan accounts for payments that do not belong. A periodic internal review is far easier than a correction after the problem has grown.
Gather The Facts
Document what happened, the dates, the amounts, and what has been repaid or restored to the plan. Put the timeline in writing while memories are fresh, and gather the supporting records, such as payroll reports and bank statements. Counsel will usually ask for this before anything is submitted.
Apply Before Contact
The program is built for voluntary correction. Ask counsel whether an agency inquiry is already open, because that can affect eligibility. Timing can matter, so do not wait once you suspect a problem. Talk to counsel promptly about whether an inquiry or audit has begun and what that means for your options.
Keep The Letter
If you receive a no action letter, keep it with your plan records. Store it with the plan document, the correction file, and the related records, and note who holds the original. It may be useful later if the issue comes up in an audit, a sale, or a change in plan officials.
Three questions to settle.
Is The Problem Eligible
Not every ERISA problem fits the program. Ask counsel whether yours is a listed transaction. The program lists specific types of transactions, and a problem outside the list may need a different approach. Describe your facts to counsel and ask what path fits best.
Is Anyone Under Investigation
The program has conditions about investigations. Confirm the plan and the plan officials are clear. If any agency inquiry or related proceeding exists, eligibility may be affected. Ask counsel to check the current conditions before submitting anything, and avoid assuming the program will be available.
Who Restores The Money
Correction programs generally call for restoring plan losses and lost earnings to the plan. Who bears the cost of that restoration, and of any penalties, fees or taxes, depends on the facts and on who is responsible for the problem. Ask counsel or your benefits adviser to review your situation before correction begins.
How The Voluntary Fiduciary Correction Program Works
Run By The Department Of Labor
The Employee Benefits Security Administration runs the program, which lets employers and plan officials voluntarily correct certain ERISA violations.
Covered Transactions Only
Applicants must identify the violations and confirm they are transactions the program covers, such as delinquent participant contributions and certain participant loan failures.
Restore Losses
The corrective steps include restoring losses or profits, with interest where applicable, and distributing supplemental benefits to participants.
File An Application
The applicant files with the Department of Labor, including documentation of the corrective actions, and a model application form is available.
Conditional Relief From Taxes
Corrections made through the program carry conditional relief from certain taxes, subject to the program’s conditions.
2025 Update
The program was updated in 2025 to add a self correction feature for specific transactions, effective March 17, 2025.
Source: Department of Labor VFCP page.
Common Questions About The Correction Program
Does the program only apply to retirement plans?
No. EBSA describes it as covering retirement, health and other benefit plans. A newer self-correction web tool is limited to certain retirement plan transactions, so a health plan problem generally goes through the application process.
Who pays the costs of correction?
Losses and lost earnings are restored to the plan, and the plan officials generally pay related penalties and fees themselves rather than charging the plan. Counsel can confirm the details for your situation.
Does it cover late Form 5500 filings?
No. Late annual reports have a separate delinquent filer program. See our Form 5500 late filing guide.
Will a no action letter protect against private lawsuits?
The letter addresses EBSA civil enforcement. It does not by itself resolve claims by participants.
Who can apply?
Plan officials, which can include the employer, the plan administrator and other fiduciaries. Counsel can help determine who should file.
Is this legal advice?
No. For a specific breach, involve your counsel before filing anything. We can help you gather the facts and questions.
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Laws and rules referenced
DOL Voluntary Fiduciary Correction Program — Department of Labor program for correcting certain fiduciary violations.
29 U.S.C. § 1104 — ERISA fiduciary duties: prudence and acting solely in the interest of participants.
This page is general information, not legal or tax advice. Rules change and facts matter, so confirm your situation with counsel or a qualified advisor.
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