DOL Proposes Clarifications to Prohibited Transaction Exemption under VFC Program

The DOL Employee Benefits Security Administration ("EBSA") proposed amendments to Prohibited Transaction Exemption 2002-51 to clarify the circumstances under which relief may be provided for misconduct self-corrected under the DOL's Voluntary Fiduciary Correction Program (the "VFC Program").

The VFC Program allows entities that may have engaged in a breach of fiduciary duty under ERISA to avoid certain civil penalties if self-corrective action is taken. The amendments would establish the conditions under which entities may qualify for excise tax relief for self-corrected errors. The amendments would also provide that email notification of relief satisfies the condition that entities must obtain a no-action letter from EBSA acknowledging an exemption. EBSA also proposed removing the limitation that prohibits entities from applying for similar relief more than once within a three-year period.

Comments are due by January 20, 2023.