What Is the DOL Voluntary Fiduciary Correction Program?

VFCP is the Department of Labor's program for voluntarily correcting specified ERISA fiduciary violations before they become enforcement cases. It is not the DOL version of EPCRS. A single 401(k) mistake can require both programs because ERISA fiduciary law and Internal Revenue Code qualification rules solve different problems.^[1][3][8]

That distinction is the place to start.

If an employer holds employee deferrals too long, the same facts can create:

• an ERISA plan-asset and fiduciary problem
• a prohibited transaction
• possible Section 4975 excise tax
• a plan qualification issue requiring separate IRS analysis.

One correction file may need several legal tracks.

What VFCP Actually Does

The Employee Benefits Security Administration uses VFCP as a voluntary enforcement program.^[1][3]

The traditional route lets an eligible applicant:

1. identify a covered transaction
2. complete the prescribed correction
3. restore losses or profits where required
4. document the work
5. submit an application to EBSA.

If the application is complete and the breach has been properly corrected, EBSA can issue its formal no-action letter.^[3][6]

That is the core bargain.

The applicant fixes the problem before enforcement.

EBSA narrows its civil enforcement response to the corrected breach.

What VFCP Does Not Do

The program does not:

• approve every aspect of the plan
• correct every possible ERISA violation
• replace IRS EPCRS
• automatically erase Section 4975 excise tax
• bind plan participants
• bind the IRS
• bind another governmental agency.

Those limitations are not footnotes.

They determine when the program is actually useful.

VFCP and EPCRS Solve Different Legal Problems

DOL VFCP

Focuses on specified violations of ERISA fiduciary and prohibited-transaction rules.

IRS EPCRS

Focuses on retirement-plan tax qualification under the Internal Revenue Code.

INV-110 through INV-117 cover EPCRS.

A sponsor should not choose between the two until it knows which laws the facts violated.

Example: Late Employee Deferrals

Employees contribute:

$80,000

through payroll.

Employer should move the money promptly to the 401(k) trust.

Instead, the money remains in the employer's operating account.

That can raise a DOL issue because participant contributions become plan assets under ERISA's timing rules.

It can also raise:

• prohibited-transaction tax
• lost-earnings restoration
• potential IRS qualification questions.

Filing one correction with one agency does not automatically settle the other agency's jurisdiction.

VFCP Is Not DFVCP

The names are confusing.

VFCP

Voluntary Fiduciary Correction Program

Corrects specified fiduciary violations and transactions.

DFVCP

Delinquent Filer Voluntary Compliance Program

Provides a reduced-penalty path for certain late Form 5500 filings.

If the problem is:

late Form 5500

start with DFVCP.

If the problem is:

plan assets were misused or participant funds were remitted late

VFCP may be relevant.

If both happened:

both programs may need analysis.

The 2025 Update Changed the Program Materially

DOL's latest major update took effect:

March 17, 2025.^[1][2]

The changes included:

• a new Self-Correction Component (SCC)
• broader correction options for certain loan and purchase/sale transactions
• expanded sale-leaseback relief
• a bulk-application route for service providers
• changes addressing specified criminal-evidence situations
• amendments to PTE 2002-51.^[2]

The self-correction feature is the biggest practical change for many 401(k) sponsors.

Traditional VFCP vs. the 2025 Self-Correction Component

The SCC is not:

VFCP without paperwork for everything.

It is a narrow alternative route.

What Are the 19 Traditional VFCP Transaction Categories?

DOL's current program groups 19 eligible transactions across several families.^[3][4]

The categories include matters involving:

Delinquent participant funds

• late pension-plan participant contributions and loan repayments
• certain welfare-plan participant contributions.

Loans involving the plan

• fair-market-rate loans to parties in interest
• below-market loans
• delayed perfection of security.

Participant loans

• specified loans failing plan/Code terms
• certain defaulted loans.

Purchases, sales and exchanges

• plan purchases from parties in interest
• plan sales to parties in interest
• sale-leaseback transactions
• purchases above fair market value from non-parties
• sales below fair market value to non-parties
• holding certain illiquid assets.

Benefit valuation

• benefit payments based on improper asset valuation.

Plan expenses and compensation

• duplicate, excessive or unnecessary compensation
• improper plan expenses
• dual compensation to a fiduciary.

That list illustrates the program's design.

VFCP corrects defined transaction types.

It is not a general:

"tell DOL anything that went wrong"

program.

A Covered Category Still Needs the Prescribed Correction

Finding a transaction on the list is only step one.

The applicant has to use the correction method DOL specifies for that category.^[2][3]

Depending on the transaction, correction can require:

• repayment of principal
• lost earnings
• restoration of profits
• rescission
• fair-market-value payment
• qualified appraisal
• supplemental participant payments
• revised loan terms
• payment of correction expenses.

The legal classification determines the economics.

The Governing Principle Is Restoration

The fact sheet states that applicants must restore:

• the plan
• participants
• beneficiaries

to the position they would have occupied absent the breach.^[2]

That is more demanding than:

"return the original dollars."

If the plan lost investment opportunity, the correction can include earnings.

If the wrongdoer profited from use of plan assets, the plan can be entitled to those profits instead.

Lost Earnings and Restoration of Profits Are Different

Suppose an employer improperly uses:

$100,000

of plan money for 60 days.

Lost earnings question

What would the plan reasonably have earned if the money had remained available to the plan?

Restoration-of-profits question

What profit did the responsible party actually earn from using that $100,000?

Where both are applicable, VFCP generally requires restoration using the program's specified methodology, which can result in the greater amount controlling.^[2][4]

That prevents a fiduciary from keeping a profitable benefit merely because the plan's hypothetical investment return was lower.

Example: Profit Exceeds Lost Earnings

Plan money used:

$200,000

Calculated lost earnings:

$4,500

Identifiable profit from use of the money:

$11,000

If the applicable VFCP correction rule requires the greater amount:

the correction does not stop at $4,500.

The plan should receive the economically stronger restoration.

That is fiduciary law doing what it is supposed to do:

removing the benefit of misuse.

DOL's Online Calculator Is Useful but Narrow

EBSA provides an Online Calculator for correction amounts.^[4]

It can calculate:

• lost earnings
• applicable interest
• restoration of profits when determinable

using the program's methodology.^[4]

The calculator is highly useful.

It is not the correction by itself.

The Calculator Does Not Supply the Missing Principal

DOL warns that the calculator output can reflect:

lost earnings and interest

without including the principal amount that also may need to be repaid.^[4]

Example:

Late participant contribution:

$25,000

Calculator lost earnings:

$420

Required economic correction can include:

$25,000 principal + $420 lost earnings

if the principal has not already been transmitted.

Looking only at the calculator total can understate what the plan is owed.

The Calculator Does Not Decide Eligibility

The tool does not answer:

• Is the transaction actually covered?
• Is the applicant under investigation?
• Was the plan made whole?
• Is an appraisal required?
• Does PTE 2002-51 apply?
• Is IRS correction also required?

Arithmetic is one layer.

Program eligibility is another.

Correction Expenses Usually Stay Off the Plan

DOL's fact sheet states that applicants generally must pay expenses associated with correcting transactions, such as:

• appraisals
• recalculating participant accounts.^[2]

That makes sense.

The plan should not normally bear additional costs caused by a fiduciary breach that someone else is responsible for correcting.

Former Participants Can Still Be Owed Money

A fiduciary correction does not stop at active employees.

DOL contemplates supplemental distributions to:

• former employees
• beneficiaries
• alternate payees

where appropriate.^[2]

A sponsor may need:

• address searches
• beneficiary records
• rollover coordination
• payment evidence.

"Employee left" is not a correction method.

Who Can Apply?

DOL says potential applicants can include persons who may be liable for fiduciary violations, including:^[2][3]

• plan sponsors
• plan officials
• parties in interest
• other individuals within the program's eligibility framework.

The program is not limited to the company named on Form 5500.

Responsibility can follow the transaction.

The Under-Investigation Rule Is the Critical Eligibility Gate

Traditional VFCP is voluntary correction before the matter has crossed into defined investigation status.

DOL says neither:

• the plan
• the applicant

can be Under Investigation as the program defines that term.^[2][3]

The definition is broader than:

"EBSA sent us an investigator."

What Counts as Under Investigation?

Current DOL enforcement guidance includes several triggers.^[3]

EBSA investigation

A plan official or representative has received oral or written notification from EBSA of an investigation involving:

• the plan
• the potential applicant
• the plan sponsor

in connection with a plan-related act or transaction.

Criminal investigation

A governmental agency is conducting a criminal investigation involving the plan or specified plan-related conduct.

IRS Employee Plans examination

An IRS TE/GE Employee Plans examination can place the plan Under Investigation for VFCP purposes.^[3]

That cross-agency rule matters.

An IRS audit can close a DOL voluntary-correction door.

PBGC or state investigation

Specified investigations or examinations by:

• PBGC
• state attorney general
• state insurance commissioner

also enter the definition, subject to the VFCP's disclosure rule.^[3]

An IRS Examination Can Affect Both Correction Systems

INV-121 explains the IRS examination cutoff under EPCRS.

Now add the DOL side.

If IRS Employee Plans is examining the plan:

• VCP can be unavailable under EPCRS
• VFCP can also be unavailable because the plan meets DOL's defined investigation status.^[3][8]

One examination can therefore close two voluntary programs.

That is a strong reason to diagnose known problems early.

A Complaint Contact Does Not Always Close VFCP

DOL includes an important nuance.

A plan is not necessarily Under Investigation merely because EBSA staff contacts a plan official about a complaint.^[3]

The exception becomes more fact-sensitive when:

• the complaint concerns the same transaction
• the plan had not received the required correction amount by the time EBSA made contact.^[3]

The practical rule is:

do not assume every EBSA phone call kills VFCP, and do not assume it never does.

Analyze the transaction and timing immediately.

The Traditional Route Ends With Written EBSA Relief

If the applicant:

• is eligible
• fully corrects
• supplies the required documentation
• satisfies the program

EBSA can issue an individualized written response confirming its enforcement position.^[3][6]

The sample letter explains the relief more precisely than the phrase:

"DOL approval."

What the Written EBSA Relief Does

For the specified corrected breach, EBSA generally states that it will not:

• recommend that the Solicitor of Labor bring civil enforcement action against the applicant
• impose applicable ERISA Section 502(l) or 502(i) penalties on the repaid amount, as stated in the letter.^[6]

That is meaningful enforcement relief.

What It Does Not Do

The sample agency letter also makes its limits explicit.^[6]

It does not prevent:

• criminal investigation
• EBSA action against another person
• IRS action
• participant or beneficiary claims
• action by another government agency.

EBSA's promise binds:

EBSA.

Not the world.

Example: Participant Can Still Have Rights

Employer improperly uses plan assets.

It corrects under VFCP.

EBSA issues the individualized agency letter to the applicant.

A participant believes the same conduct caused an additional individualized loss.

The DOL letter does not automatically extinguish whatever private rights the participant may have.

That is why:

EBSA letter

is more accurate than:

release from everyone.

Incomplete Applications Can Backfire

The fact sheet warns that incomplete or unacceptable applications may be rejected and can lead to enforcement action and applicable civil penalties.^[2]

That makes VFCP different from:

ask DOL whether this looks okay.

The traditional filing should generally be made after the sponsor has:

• identified the correct category
• completed the prescribed correction
• assembled supporting evidence.

The Application Is a Correction Proof File

Typical VFCP documentation can include:^[2]

• relevant plan documents
• transaction records
• loan or lease documents
• valuation evidence
• lost-earnings calculations
• profit-restoration calculations
• proof of payment
• transaction-specific documents
• signed checklist
• penalty-of-perjury statement.

The filing should let EBSA reproduce the correction.

The 2025 SCC Is Much Narrower

The SCC covers two transaction categories:^[1][2][5]

1. qualifying delinquent participant contributions and participant loan repayments to pension plans
2. eligible inadvertent participant loan failures.

That is all.

A prohibited real-estate purchase does not become self-correctable merely because the new SCC exists.

SCC Route 1: Late Participant Contributions and Loan Repayments

This is likely the most common 401(k) use.

Participant salary deferrals and loan repayments become problematic when the employer retains them beyond the time allowed under DOL's plan-asset timing rules instead of transmitting them to the plan.^[2]

The 2025 SCC can simplify correction if every condition is met.

The Plan Can Be Any Size

DOL's current fact sheet says this SCC category is available to pension plans:

of any size.^[2]

That is important.

The $1,000 test applies to:

lost earnings

not:

• plan assets
• participant count
• principal amount.

The Lost-Earnings Ceiling Is $1,000

For this SCC route:

total lost earnings must be $1,000 or less.^[2][5]

Example:

Late deferrals:

$90,000

Lost earnings:

$640

The dollar amount withheld is not what determines the $1,000 eligibility ceiling.

The lost-earnings calculation does.

The 180-Day Requirement Applies to Remittance

The delinquent participant contributions or loan repayments must be remitted to the plan within:

180 calendar days

from the date they were:

• withheld from participants' pay
• or received by the employer.^[2][5]

That is an SCC eligibility limit.

It is not the ordinary ERISA deadline for depositing participant money.

180 Days Is Not a Safe Harbor

This mistake would be serious:

"DOL gives employers 180 days to deposit 401(k) deferrals."

No.

The participant-contribution plan-asset regulation requires transmission much earlier based on when amounts can reasonably be segregated from employer assets, subject to applicable rules.

The 180-day number says:

a delinquency that already happened may still fit this correction route if corrected within that outer SCC window.

It does not authorize routine delay.

Example: 45-Day Delay, $380 Lost Earnings

Assume:

• participant funds were remitted 45 days after withholding
• the remittance was late under the actual plan-asset timing rule
• DOL Online Calculator shows $380 of lost earnings
• no disqualifying investigation status
• employer pays all applicable charges itself.

The facts can fit the SCC threshold if the other program requirements are satisfied.^[2][5]

The sponsor still must:

• restore lost earnings
• file the SCC Notice
• retain required records.

Example: 120-Day Delay, $1,450 Lost Earnings

Assume:

• principal remitted within 180 days
• lost earnings = $1,450.

That fails the SCC's:

$1,000-or-less

requirement.^[2]

The sponsor should not round the number down.

Traditional VFCP may still be available.

Self-correction and full application are separate eligibility tests.

The DOL Online Calculator Is Mandatory for This SCC Category

For the late-participant-funds SCC route, the current eligibility tool asks whether the applicant used DOL's Online Calculator and calculated earnings from the withholding or receipt date.^[5]

That is stricter than the general traditional application route, where manual calculations can be permitted under the program methodology.^[4]

Do not import the traditional calculation flexibility into the SCC.

The Employer Pays Penalties, Late Fees and Other Charges

DOL's SCC conditions say applicable:

• penalties
• late fees
• other charges

must be paid by the employer or other plan official rather than the plan.^[2][5]

The plan should not finance the cost of the fiduciary violation.

SCC Requires an Electronic Notice

Self-correction is not:

fix it and put a memo in the drawer.

Eligible users submit an:

SCC Notice

through EBSA's web tool.^[2][5]

The tool collects specified information and produces an electronic acknowledgment.

Retention Records Matter

For late participant contributions/loan repayments, the self-corrector must assemble the required records, including:^[2]

• SCC Retention Record Checklist
• penalty-of-perjury statement
• supporting correction documentation

and provide them to the plan administrator for retention.

The self-correction route reduces agency filing.

It does not eliminate the evidence file.

SCC Users Do Not Get an Individualized Agency Letter

This distinction is easy to miss.

Traditional VFCP:

individualized EBSA letter

if accepted.

SCC:

email acknowledgment after the electronic notice.^[2]

That acknowledgment is not merely a receipt with no program significance; the SCC can provide the program's enforcement relief when all conditions are met.

But it is not the same instrument as the individualized letter available through the full application route.

SCC Route 2: Eligible Inadvertent Participant Loan Failures

The second self-correction category covers specified participant-loan failures that can be self-corrected under IRS EPCRS.^[1][2][5]

DOL identifies examples involving:

• amount
• duration
• level amortization
• payroll withholding failure causing default
• missing spousal consent
• too many loans under plan terms.^[2]

This category deliberately coordinates with the IRS correction framework.

DOL Self-Correction Can Depend on IRS Correction

For eligible inadvertent participant-loan failures, the DOL SCC requires correction through EPCRS as applicable.^[2]

That creates a useful sequence:

qualify for IRS self-correction → perform the EPCRS correction → satisfy DOL SCC requirements → file the EBSA notice.

The programs remain legally separate even though the DOL route uses the IRS correction as part of its condition.

Example: Payroll Fails to Withhold Loan Payments

Participant loan terms are otherwise valid.

Payroll fails to withhold scheduled repayments for several months.

The loan defaults.

Potential issues include:

• Code Section 72(p)
• plan operation
• prohibited transaction/fiduciary treatment.

If the failure fits the eligible inadvertent participant-loan rules:

IRS EPCRS can address the tax-qualification side.

The DOL SCC can address the eligible ERISA side.

One fact pattern.

Two legal regimes.

The SCC Loan Route Has Different Documentation

DOL's fact sheet says the SCC Retention Record Checklist used for delinquent participant funds is not required for the eligible inadvertent participant-loan category.^[2]

A penalty-of-perjury statement and other required documentation still matter.

Do not assume both SCC categories have identical paperwork.

Traditional VFCP Can Still Be Better Even After 2025

The SCC is useful when:

• transaction fits one of the two categories
• every numerical/timing condition is met
• individualized agency correspondence is unnecessary.

Traditional VFCP remains important when:

• lost earnings exceed $1,000
• late funds miss the SCC timing condition
• transaction is a purchase, sale, loan, expense or valuation issue
• correction needs the broader application structure
• applicant wants individualized written EBSA relief.

The new route supplemented VFCP.

It did not replace it.

PTE 2002-51 Is a Separate Layer

VFCP relief focuses on DOL civil enforcement.

Some corrected transactions can also create:

Internal Revenue Code Section 4975 excise tax.

DOL's related class exemption is PTE 2002-51

can provide conditional excise-tax relief for specified transactions when all requirements are satisfied.^[2][7]

Do not assume VFCP itself erases the tax.

The Class Exemption Covers Six Transaction Groups

The 2025 fact sheet identifies six transaction groups eligible for that excise-tax exemption, including qualifying:^[2]

• late participant contributions or participant loan repayments
• fair-market-rate plan loans to a disqualified person
• purchases or sales between plan and disqualified person at fair market value
• specified employer/affiliate real-estate sale-leasebacks
• certain illiquid-asset transactions
• specified settlor-expense payments by the plan.

The exact exemption conditions matter.

The 2025 Amendment Extended PTE Relief to SCC

The 2025 changes extended this excise-tax relief framework to qualifying SCC corrections.^[1][2]

DOL says the person relying on the exemption must satisfy:

• applicable VFCP requirements
• the exemption's conditions
• transaction-specific notice/documentation obligations

and receive the applicable full-program letter or SCC acknowledgment.^[2]

This is why:

SCC eligibility

and:

excise-tax exemption eligibility

must be tested separately.

Form 5330 Still Requires Analysis

IRC Section 4975 generally imposes excise tax on certain prohibited transactions involving qualified retirement plans.

Form 5330 is used for specified excise taxes.^[9][10]

If PTE 2002-51 fully applies:

the transaction may receive the conditional relief the exemption provides.

If it does not:

VFCP correction can still leave a Form 5330 issue.

Never write:

"DOL accepted VFCP, so no IRS tax form is needed."

That conclusion requires its own authority.

Example: Late Deferrals and PTE 2002-51

Employer remits late participant deferrals.

It:

• restores the funds
• pays lost earnings
• qualifies for VFCP/SCC
• satisfies the related class-exemption conditions.

the exemption may provide Section 4975 excise-tax relief for that qualifying transaction.^[2]

If any exemption condition is missed:

the sponsor must separately analyze the Code tax.

What If the Same Error Is Also an Operational Failure?

Suppose payroll holds deferrals late.

The plan document and Code also require correct administration.

The sponsor should ask:

DOL

Were participant assets handled late?

IRS

Did the plan fail to operate in accordance with qualification rules or loan terms?

Excise tax

Did Section 4975 apply?

Reporting

Are Form 5500 or Form 5330 changes needed?

Four questions can arise from one payroll failure.

Traditional VFCP Can Lead to IRS Referral

The sample no-action letter warns that when a prohibited transaction occurred and no exemptive relief is available, ERISA Section 3003(c) can require information to be transmitted to Treasury/IRS.^[6]

That is important.

A DOL application should not be prepared as though the IRS will never see it.

Coordinate the tax analysis first.

Example: Improper Settlor Expense

The plan pays:

$40,000

of expense that should have been borne by the employer as a settlor/business expense.

Potential VFCP correction can require the employer to:

• repay the plan
• restore earnings where applicable
• pay correction costs
• document the transaction.

If the transaction falls within a covered PTE 2002-51 category and every condition is met, excise-tax relief may also be available.^[2]

The plan should not simply reclassify the expense and move on.

Example: Plan Buys Property From Employer

Plan buys real estate from the sponsoring employer.

Even if the price appears fair, the transaction falls within the prohibited-transaction framework.

VFCP contains correction methods for specified purchases and sales.^[2][4]

Correction may involve:

• rescission
• repurchase
• valuation
• restoration of losses/profits
• documentation.

INV-076 explains why fair market value alone does not make the original transaction permissible.

Example: Excessive Service-Provider Compensation

Plan pays a provider compensation that turns out to be:

• duplicative
• excessive
• unnecessary.

VFCP includes a correction category for those payments.^[2][4]

The correction analysis asks what the plan should have paid and what amount needs to be restored.

This is not the same issue as merely negotiating a lower fee for next year.

Past overpayment needs correction.

Example: Investigation Begins Before Filing

Sponsor identifies a prohibited transaction.

Before the VFCP application is filed:

EBSA notifies the plan of an investigation directly related to the transaction.

The sponsor should not assume it can race the application into the regional office.

The program's investigation rule can make the voluntary route unavailable.^[3]

Once the cutoff is crossed, ordinary enforcement resolution replaces voluntary correction.

Example: IRS Exam Starts First

Sponsor identifies:

• participant-loan failures
• related ERISA concerns.

Before the DOL filing:

IRS Employee Plans begins examining the plan.

DOL treats an IRS Employee Plans examination as a disqualifying investigation event.^[3]

That can close VFCP even though EBSA itself has not opened an investigation.

Cross-agency timing matters.

Why the Correction Chronology Should Be Preserved

For every fiduciary correction, keep dates for:

• discovery
• principal restoration
• lost earnings
• participant allocation
• vendor engagement
• SCC notice or VFCP application
• agency contact
• IRS examination contact
• final agency letter/acknowledgment.

Do not reconstruct the history later from memory.

Eligibility can depend on what happened first.

Build the Traditional Application as a Proof File

A strong file should contain:

Transaction classification

Which of the 19 eligible categories applies?

Fiduciary analysis

What ERISA rule was violated or potentially violated?

Under-investigation memo

Why is the applicant eligible to use the voluntary program?

Principal amount

What money/property belongs back with the plan?

Lost earnings/profits

Show calculation method and dates.

Valuation

If assets are involved, preserve market evidence or qualified appraisal where required.

Participant population

Include former participants and beneficiaries if affected.

Payment proof

Bank records, trust confirmation, participant allocations.

Correction costs

Show they were not improperly shifted to plan participants.

IRS analysis

EPCRS, Form 5330 and the class-exemption analysis.

Application documents

Checklist, penalty-of-perjury statement, regional-office filing, final agency letter.

The agency filing should be the summary of a complete correction.

Not the place where the sponsor first figures out what happened.

SCC File for Late Participant Funds

For the 2025 self-correction route, preserve at least the materials required by DOL plus the sponsor's supporting work:

• withholding/receipt dates
• actual remittance dates
• proof the 180-day requirement was met
• Online Calculator output
• proof lost earnings were deposited
• proof applicable charges were paid outside the plan
• SCC Notice
• email acknowledgment
• retention checklist
• penalty-of-perjury statement
• participant allocation evidence.

A short process can still need a strong record.

SCC File for Participant-Loan Failures

Coordinate:

• loan document
• plan terms
• repayment history
• failure classification
• EPCRS correction analysis
• corrective payments/re-amortization where applicable
• EBSA SCC Notice
• acknowledgment
• penalty-of-perjury documentation.

The DOL route depends on the IRS correction architecture.

Keep the two analyses linked but distinct.

VFCP vs. EPCRS vs. DFVCP

Do not choose a program by acronym.

Choose it by legal defect.

Full-Application Letter vs. SCC Acknowledgment

The SCC trades individualized agency correspondence for a streamlined process.

Late Contribution SCC Eligibility Checklist

For delinquent participant contributions or loan repayments, ask:^[2][5]

Is this a pension/retirement plan? → were the funds transmitted within 180 days of withholding or receipt? → was DOL's Online Calculator used? → were lost earnings calculated from the withholding/receipt date? → are total lost earnings $1,000 or less? → were penalties, late fees and other charges paid outside the plan? → is neither the plan nor self-corrector Under Investigation? → were lost earnings actually restored? → was the SCC Notice filed? → were retention records completed?

A "no" can move the matter out of SCC.

It does not necessarily move it out of traditional VFCP.

The $1,000 Rule Creates a Useful Triage Test

Assume a sponsor discovers 25 late payrolls.

Before deciding the route:

1. calculate lost earnings using the required tool
2. aggregate them as required by the program
3. compare with $1,000.

Do not assume:

• low principal = SCC
• short delay = SCC
• small plan = SCC.

The actual eligibility metric is specific.

The 180-Day Rule Creates a Second Triage Test

A late deposit can have:

• lost earnings below $1,000
• but remittance after day 180.

That misses the SCC route.

Traditional VFCP may remain available if:

• voluntary eligibility remains open
• transaction fits
• correction is completed.

The new streamlined program has hard boundaries.

2025 Bulk Applications Can Help Service Providers

The update added a route allowing service providers to submit a:

bulk application

for violations involving multiple plans under the program's conditions.^[2]

That can matter when one:

• recordkeeper
• payroll provider
• administrator

causes the same eligible problem across many plans.

A sponsor should still verify:

• its own plan is included
• correction is complete
• participant amounts are right
• agency relief actually covers the relevant transaction.

The provider's filing does not eliminate sponsor oversight.

Criminal Evidence Has a Narrow 2025 Improvement

The 2025 update also modified treatment of certain delinquent participant-contribution/loan-repayment applications containing evidence of criminal activity.^[2]

DOL describes a path where an applicant that did not participate in the criminal activity may still correct under specified conditions, including required notification to law enforcement.^[2]

This is not a general:

criminal conduct can use VFCP

rule.

It is a tightly conditioned exception.

Frequently Asked Questions

What does VFCP stand for?

Voluntary Fiduciary Correction Program.

Who administers it?

The U.S. Department of Labor's Employee Benefits Security Administration.^[1]

Is VFCP the same as EPCRS?

No.

VFCP addresses specified ERISA fiduciary violations. EPCRS addresses tax-qualified plan failures under the Internal Revenue Code.^[3][8]

How many traditional VFCP transaction categories are there?

DOL's current enforcement manual identifies 19 specific transactions.^[3]

What do I get if a traditional application is accepted?

EBSA can issue written enforcement relief for the specified corrected breach.^[3][6]

What does the traditional application protect?

It addresses EBSA's civil-enforcement position for the identified corrected breach. It does not approve the whole plan or bind the IRS, participants, beneficiaries or other agencies.^[6]

What changed in 2025?

The March 17, 2025 update added a SCC for two defined transaction categories and made other program/PTE changes.^[1][2]

What can use the SCC?

Two categories:

• qualifying delinquent participant contributions/loan repayments
• eligible inadvertent participant loan failures.^[2]

What is the $1,000 limit?

For the late-participant-funds SCC route, total lost earnings must be $1,000 or less.^[2][5]

Is $1,000 the maximum late contribution?

No.

The threshold applies to lost earnings.

What is the 180-day rule?

For that SCC route, the delinquent funds must be remitted within 180 calendar days from withholding or receipt.^[2][5]

Does that mean an employer has 180 days to deposit 401(k) deferrals?

No.

The 180-day rule is a correction-program eligibility ceiling, not the normal plan-asset remittance deadline.

Must I use DOL's calculator?

For the late-contribution SCC route, the current eligibility process requires the Online Calculator.^[5]

Traditional VFCP can permit calculations under the program's manual methodology as applicable.^[4]

What does an SCC user receive?

An email acknowledgment after submitting the required electronic notice, rather than the individualized agency letter used in the traditional route.^[2]

Can I use VFCP after DOL starts investigating?

Generally not once the plan or applicant meets VFCP's Under Investigation definition.^[2][3]

What if IRS is auditing the 401(k)?

An IRS Employee Plans examination is included in DOL's definition and can make VFCP unavailable.^[3]

Does any EBSA complaint call kill eligibility?

Not automatically. DOL has a specific complaint-contact rule that depends on the transaction and correction timing.^[3]

Does VFCP eliminate Form 5330?

Not automatically.

PTE 2002-51 can provide conditional excise-tax relief for specified transactions. If the exemption does not apply, separate IRS tax analysis remains necessary.^[2][9][10]

Can VFCP and EPCRS both apply?

Yes.

A single event can violate both ERISA fiduciary rules and tax-qualification rules.

The ROIStreet VFCP Decision Sequence

Identify the transaction → determine whether the problem is fiduciary, qualification, reporting, tax—or several at once → test whether the transaction fits a VFCP category → determine investigation status before filing → test the two 2025 SCC routes first → if late participant funds, verify 180-day remittance and $1,000 lost-earnings ceiling → if participant-loan failure, complete the required EPCRS analysis → calculate principal, lost earnings and restoration of profits → use DOL's Online Calculator where required or appropriate → restore the plan, participants and beneficiaries fully → keep correction costs off the plan where required → test the excise-tax exemption separately → analyze Form 5330 and other IRS consequences → file SCC Notice or full VFCP application → retain the acknowledgment or final agency letter with permanent plan records → fix the payroll, governance or vendor control that caused the breach

The shortcut to avoid is:

"We fixed the money, so the problem is over."

That is incomplete.

A defensible fiduciary correction identifies the legal breach, restores the plan economically, obtains the right DOL relief, handles separate IRS consequences and fixes the control that allowed plan assets to be mishandled in the first place.

Sources & References

1. U.S. Department of Labor — Employee Benefits Security Administration: Voluntary Fiduciary Correction Program — https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-and-compliance/correction-programs/vfcp
2. U.S. Department of Labor — Employee Benefits Security Administration: Fact Sheet — Voluntary Fiduciary Correction Program — https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/fact-sheets/vfcp
3. U.S. Department of Labor — Employee Benefits Security Administration: Enforcement Manual — Voluntary Fiduciary Correction Program — https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/enforcement/oe-manual/voluntary-fiduciary-correction-program
4. U.S. Department of Labor — Employee Benefits Security Administration: VFCP Online Calculator — https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-and-compliance/correction-programs/vfcp/calculator
5. U.S. Department of Labor — Employee Benefits Security Administration: VFCP SCC Web Tool — https://www.askebsa.dol.gov/vfcp/
6. U.S. Department of Labor — Employee Benefits Security Administration: VFCP No Action Letter — https://www.dol.gov/node/63340
7. U.S. Department of Labor — Employee Benefits Security Administration: VFCP Law and Regulations — 2025 Update and PTE 2002-51 — https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-and-compliance/correction-programs/vfcp/law-and-regulations
8. Internal Revenue Service: Revenue Procedure 2021-30 — Employee Plans Compliance Resolution System — https://www.irs.gov/irb/2021-31_IRB
9. Internal Revenue Service: Retirement Topics — Tax on Prohibited Transactions — https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-prohibited-transactions
10. Internal Revenue Service: Instructions for Form 5330 — https://www.irs.gov/instructions/i5330

Educational Disclaimer

ROIStreet publishes educational content about retirement-plan fiduciary duties, correction programs and tax consequences. This article is not legal, tax, fiduciary, controversy or plan-administration advice. VFCP eligibility, SCC eligibility, correction amounts, investigation status, prohibited-transaction exemptions, Form 5330 consequences and EPCRS treatment depend on the exact transaction, plan documents, correction timing, agency contacts and current law.

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We strive to explain before we evaluate, present evidence before opinions, discuss risks alongside potential benefits, distinguish facts from analysis, and correct material errors transparently.

Our purpose is to help readers better understand investing—not to tell them what to do.