QUESTION: We understand that the DOL has added a self-correction component under the Voluntary Fiduciary Correction (VFC) Program. What errors can be self-corrected, and what does self-correction entail?
ANSWER: You are correct that while self-correction was not previously available under the VFC Program, the DOL introduced a self-correction component (SCC) in 2025. Self-correction is available effective March 17, 2025, for retirement plan failures to timely transmit participant contributions or participant loan repayments and for eligible inadvertent participant loan failures. A party using the SCC must notify EBSA of the self-correction by filing a notice containing specified elements through an online tool. The SCC notice includes basic information about the applicant and the plan along with information about the correction. It must be submitted by a “plan official” (generally a plan sponsor or fiduciary) or authorized representative. An automatic acknowledgement email will be generated; self-correctors will not receive a “no action” letter (as is issued for regular VFC Program submissions).
Self-correction of delinquent participant contributions and loan repayments is available to any plan (regardless of the number of plan participants or the amount of plan assets) for corrections where the amount of lost earnings—determined using the DOL’s online calculator—is $1,000 or less. The delinquent payment must be submitted to the plan no later than 180 calendar days from the date of withholding or receipt of the contribution or loan repayment. Transaction information to be provided in the SCC notice includes the principal amount, the amount of lost earnings and the date paid to the plan, the date of withholding or receipt, and the number of participants affected by the correction. The self-corrector must complete and retain the SCC retention record checklist (available on the DOL website), including a penalty of perjury statement signed by a plan fiduciary with knowledge of the transaction.
Eligible inadvertent plan loan failures that are self-corrected under the IRS’s Employee Plans Compliance Resolution System (EPCRS) can also be self-corrected under the VFC Program. Transaction information to be provided in the SCC notice includes the type of participant loan failure, the loan amount, the dates on which the failure was identified and corrected, and the number of participants affected by the correction. The self-corrector must complete the penalty of perjury statement, but the SCC retention record checklist is not required.
Any relief afforded by a self-correction is limited to the specific breaches permitted to be self-corrected. If any terms of the self-correction component are not satisfied, EBSA reserves the right to investigate and take appropriate action. Also, participation in the self-correction component will not preclude EBSA from taking criminal action if appropriate.
For more information, see EBIA’s 401(k) Plans manual at Sections XXXVI.B.2 (“VFC Program Eligibility: Self-Correction”) and XXXVI.G.6 (“Procedures Under Self-Correction Component”).
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