Proposed Rule2023-02545
Amendment and Restatement of Voluntary Fiduciary Correction Program
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
February 14, 2023
Effective
November 21, 2022
Issuing agencies
Labor DepartmentEmployee Benefits Security Administration
Abstract
This document reopens the comment period with respect to amendments to the Voluntary Fiduciary Correction Program (VFC Program or Program) under Title I of the Employee Retirement Income Security Act of 1974, as amended (ERISA), and to the proposed amendment to Prohibited Transaction Exemption 2002-51 (PTE 2002-51), both published in the Federal Register on November 21, 2022. The Employee Benefits Security Administration (EBSA) published the modifications to the Program and a proposed amendment to PTE 2002-51 to both simplify and expand the original VFC Program, and solicited comment from interested persons by January 20, 2023. On December 29, 2022, the Consolidated Appropriations Act, 2023, which includes a provision pertaining to the VFC Program, was signed into law. The Department is reopening the comment period to allow commenters to address any issues raised by the new statutory provision.
Full Text
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<title>Federal Register, Volume 88 Issue 30 (Tuesday, February 14, 2023)</title>
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[Federal Register Volume 88, Number 30 (Tuesday, February 14, 2023)]
[Proposed Rules]
[Pages 9408-9409]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-02545]
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DEPARTMENT OF LABOR
Employee Benefits Security Administration
29 CFR Parts 2550, 2560, and 2570
RIN 1210-AB64
Amendment and Restatement of Voluntary Fiduciary Correction
Program
AGENCY: Employee Benefits Security Administration, Labor.
ACTION: Proposed program amendments and amendments to prohibited
transaction exemption; reopening of comment period.
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SUMMARY: This document reopens the comment period with respect to
amendments to the Voluntary Fiduciary Correction Program (VFC Program
or Program) under Title I of the Employee Retirement Income Security
Act of 1974, as amended (ERISA), and to the proposed amendment to
Prohibited Transaction Exemption 2002-51 (PTE 2002-51), both published
in the Federal Register on November 21, 2022. The Employee Benefits
Security Administration (EBSA) published the modifications to the
Program and a proposed amendment to PTE 2002-51 to both simplify and
expand the original VFC Program, and solicited comment from interested
persons by January 20, 2023. On December 29, 2022, the Consolidated
Appropriations Act, 2023, which includes a provision pertaining to the
VFC Program, was signed into law. The Department is reopening the
comment period to allow commenters to address any issues raised by the
new statutory provision.
DATES: The comment periods for the documents published on November 21,
2022, at 87 FR 70753 and 87 FR 71164, are reopened. Written comments
should be submitted on or before April 17, 2023. The Department will
notify the public of the availability of the amended and restated VFC
Program in a subsequent Federal Register document. The Department will
also publish any final amendments to PTE 2002-51 in a subsequent
Federal Register document.
ADDRESSES: You may submit written comments, identified by RIN 1210-
AB64, to one of the following addresses:
<bullet> Federal eRulemaking Portal: <a href="http://www.regulations.gov">www.regulations.gov</a>. Follow
the instructions for submitting comments.
<bullet> Mail: Office of Regulations and Interpretations, Employee
Benefits Security Administration, Room N-5655, U.S. Department of
Labor, 200 Constitution Avenue NW, Washington, DC 20210, Attention:
Amendment and Restatement of Voluntary Fiduciary Correction Program.
Instructions: Persons submitting comments electronically are
encouraged not to submit paper copies. Comments will be available to
the public, without charge online at <a href="http://www.regulations.gov">www.regulations.gov</a>, at
<a href="http://www.dol.gov/agencies/ebsa">www.dol.gov/agencies/ebsa</a>, and at the Public Disclosure Room, EBSA,
U.S. Department of Labor, Suite N-1513, 200 Constitution Avenue NW,
Washington, DC 20210.
Warning: Do not include any personally identifiable or confidential
business information that you do not want publicly disclosed. Comments
are public records and can be retrieved by most internet search
engines.
FOR FURTHER INFORMATION CONTACT: Yolanda R. Wartenberg, Office of
Regulations and Interpretations, EBSA, (202) 693-8500, for questions
regarding the VFC Program amendments in this document; Susan Wilker,
Office of Exemption Determinations, EBSA, (202) 693-8540, for questions
regarding the proposed amendments to the associated class exemption PTE
2002-51; and 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
Miatech-Plaska, Office of Enforcement, EBSA, (202) 693-8691. For
questions regarding specific applications and self-corrections under
the VFC Program, contact the appropriate EBSA Regional Office listed in
Appendix C of the document at 87 FR 71164 (Nov. 21, 2022). (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 Employee Benefits Security Administration (EBSA)
Toll-Free Hotline, at 1-866-444-EBSA
[[Page 9409]]
(3272) or visit the Department's website (<a href="http://www.dol.gov/ebsa">www.dol.gov/ebsa</a>).
SUPPLEMENTARY INFORMATION: The Department of Labor's (Department)
authority to establish the Voluntary Fiduciary Correction Program (VFC
Program or Program) derives from its authority to enforce the fiduciary
standards in Title I of the Employee Retirement Income Security Act of
1974 (ERISA), 29 U.S.C. 1132(a)(2) and 1132(a)(5), and thereby to
establish policies on how this authority will be implemented. 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\
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\1\ Under Reorganization Plan No. 4 of 1978, 5 U.S.C. App. at
237 (2012), the authority of the Secretary of Treasury to issue
exemptions pursuant to section 4975 of the Internal Revenue Code was
transferred, with certain exceptions not relevant here, to the
Secretary of Labor.
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The Employee Benefits Security Administration (EBSA) originally
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. Based on a review of the
current VFC Program, the Department concluded that certain revisions to
the Program would 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.
Accordingly, on November 21, 2022, the Department published in the
Federal Register an amended and restated VFC Program.\3\ On the same
date, EBSA also published a proposed amendment to PTE 2002-51, the
Program's associated class exemption, to make certain conforming
amendments to the class exemption.\4\ The Department solicited general
comment on any aspect of the VFC Program, including the amendments
being announced, and furthermore expressed particular interest in
public comments on whether there are other circumstances in which the
VFC Program could be integrated with corrections under the Voluntary
Correction Program of the Internal Revenue Service's Employee Plans
Compliance Resolution System (EPCRS). The Department requested that
comments on the amended and restated VFC Program be submitted on or
before January 20, 2023. For a more comprehensive discussion of the VFC
Program, please see 87 FR 71164.
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\2\ 70 FR 17516 (Apr. 6, 2005), 71 FR 20262 (April 19, 2006).
\3\ 87 FR 71164 (Nov. 21, 2022).
\4\ 87 FR 70753 (Nov. 21, 2022).
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H.R. 2617, Consolidated Appropriations Act, 2023 (CAA) was signed
into law on December 29, 2022. CAA includes a number of provisions
related to retirement and other types of plans in Division T, which is
also cited as SECURE 2.0 Act of 2022 (SECURE 2.0). Section 305 of
SECURE 2.0 provides for expansion of EPCRS to cover any ``eligible
inadvertent failure.'' The term ``eligible inadvertent failure'' as
defined in section 305(e) generally includes a failure that occurs
despite the existence of practices and procedures that satisfy EPCRS
standards and is not egregious, related to the diversion or misuse of
plan assets, or related to an abusive tax avoidance transaction.
Section 305(b) specifically provides for correction of an ``eligible
inadvertent failure'' relating to a loan from a plan to a participant,
and furthermore indicates that the Department shall treat any such loan
failures self-corrected in accordance with applicable requirements as
meeting the requirements of the VFC Program, although the Department
may impose reporting or other procedural requirements. Section 305(g)
contemplates the issuance of further guidance by the Department of
Treasury (``Treasury'') on EPCRS to take into account the provisions of
section 305.
Given the general effect of section 305 of SECURE 2.0 on EPCRS and
the specific references to the VFC Program in connection with corrected
loans to participants, the Department is reopening for 60 days the
period for submitting comments on the amended and restated VFC Program
and proposed amendment to PTE 2002-51.\5\ The Department is interested
in comments on what revisions, if any, should be made to the VFC
Program to reflect the treatment of corrections of loans to
participants as described in SECURE 2.0 section 305(b). Specifically,
how should the VFC Program be modified in the future to implement the
new deeming provision in SECURE 2.0 section 305(b)(2) (``the Secretary
of Labor shall treat any such failure which is so self-corrected under
subsection (a) as meeting the requirements of the Voluntary Fiduciary
Correction Program of the Department of Labor if . . . .'')? For
example, should Section 7.3 be amended to include a specific paragraph
treating items self-corrected under EPCRS as meeting the requirements
of the VFC Program? In addition, should the VFC Program impose
additional reporting or other procedural requirements for these
specific corrections, and why? Are changes needed to PTE 2002-51 to
implement SECURE 2.0 section 305(b)(2)? The Department is interested in
comments that address these and related issues. The Department also is
interested more generally in any other aspects of section 305 as it
affects EPCRS that should be taken into account by the Department in
making further revisions to the VFC Program and PTE 2002-51.
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\5\ The Department has advised Treasury of the reopening of this
comment period, and the Department understands that Treasury and the
Internal Revenue Service intend to review comments submitted to the
Department (as well as other stakeholder input) in developing
updates to EPCRS with respect to section 305 of SECURE 2.0. The
Department will forward to Treasury comments as they are received.
Signed at Washington, DC, this 1st day of February, 2023.
Lisa M. Gomez,
Assistant Secretary, Employee Benefits Security Administration,
Department of Labor.
[FR Doc. 2023-02545 Filed 2-13-23; 8:45 am]
BILLING CODE 4510-29-P
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</html>Indexed from Federal Register on February 14, 2023.
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