Correcting Fiduciary Breaches That Are Not Covered By The VFC Program (Posted August 15, 2003) Technical Tip 32: The following question and answer are from the DOL Q&A Session at the 2000 ASPPA Annual Conference: If you discover a VFC eligible breach and others that are not eligible, is there a way to voluntarily correct the non eligible breach in conjunction with DOL-- and avoid 502(l) penalties? MODERATORS COMMENT: As a practical matter, the moderators have found that the PWBA Regional Directors are generally willing to discuss correction methodology on a no-names basis for ERISA violations that are not eligible for VFC. Caveat: The answer was drafted by the program moderators, including Fred Reish, based on their understandings of discussions with four senior officials of the Employee Benefits Security Administration (EBSA) of the U.S. Department of Labor. As a result, it does not represent a formal or binding position statement by the EBSA. Comment by the RL&R ERISA Attorneys: Voluntary correction of fiduciary breaches, including those that are prohibited transactions can be voluntarily corrected without the use of the formal program known as VFC. This was true before VFC was issued and continues to be true after the adoption of VFC. However, because the DOL has not agreed to such correction, if the DOL is unhappy with the correction, it may decide that the correction was inadequate. If they make such decision, then they are free to bring an action against the fiduciary for civil damages. Accordingly, the purpose of VFC is to obtain reliance that DOL has accepted the correction. Such reliance can't be obtained without using VFC. However, some EBSA Regional Directors, may under certain circumstances, permit a fiduciary to use an informal procedure to implement a voluntary correction. To do this one must communicate with the Regional Director and get his informal approval for a particular voluntary correction. Following this discussion, it is possible to get a letter from the DOL acknowledging that they will take no further action with respect to the completed correction. View all Tips © 2010 Reish Luftman Reicher & Cohen, a Professional Corporation Important notice: Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner's situation. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of your situation.