Labor & Employment Law Daily Wrap Up, BENEFITS NEWS—EBSA announces fiduciary enforcement relief policy and VFCP updates, (Jan 15, 2025)

By Patricia K. Ruiz, J.D.

The EBSA provided further information on the updates in a field assistance bulletin and a fact sheet.

The Department of Labor (DOL) Employee Benefits Security Administration (EBSA) announced a new policy affecting fiduciaries of retirement plans to allow for an option to help manage small benefit amounts owed to individuals who cannot be located. The ESBA also made updates to its Voluntary Fiduciary Correction Program (VFCP) to give employers and other plan officials more efficient ways to voluntarily correct compliance issues in retirement, health, and other employee benefit plans.

Enforcement relief policy. The EBSA announced an enforcement relief policy to provide fiduciaries of retirement plans with an option to help manage small benefit amounts owed to individuals who cannot be located. The policy prevents under certain conditions the DOL from taking action under the fiduciary duty provisions of the Employee Retirement Income Security Act against fiduciaries who transfer entire benefit payments owed to missing participants of $1,000 or less to state unclaimed property funds. To qualify for relief under the policy, fiduciaries must meet the following conditions: (1) meet conditions designed to protect the interests of the missing individuals; (2) adopt best practices for locating missing participants and beneficiaries; and (3) select state unclaimed property funds that meet the minimum standards outlined in the policy. A field assistance bulletin provides further information about the new policy.

VFCP updates. The EBSA announced updates to its VFCP that provide employers and other plan officials with more efficient ways to voluntarily correct compliance issues in retirement, health, and other employee benefit plans. Included in the update is a self-correction tool employers and other plan officials can use to remedy delays in spending participant contributions, such as employee payroll deductions, and participant loan repayments to retirement plans. Employers and other plan officials may also fix mistakes related to participant loans from retirement plans. The EBSA’s update: (1) expands the scope of transactions eligible for correction; (2) clarifies transactions that are already eligible for correction; (3) simplifies administrative and procedural requirements; and (4) amends the VFCP class exemption, Prohibited Transaction Exemption 2002-51, such that plan officials can avoid the imposition of excise taxes. A fact sheet from the EBSA details the changes, which take effect March 17, 2025.

News: AgencyNews BenefitsNews PensionBenefitPlans