VFCP Overview
The VFCP allows plan sponsors and fiduciaries to self-correct certain fiduciary violations and receive a no-action letter from the DOL. VFCP covers specific transactions including: delinquent participant contributions, improper loans, prohibited transactions, and certain other fiduciary violations. Plans that use VFCP receive reduced penalties and protection from enforcement action.
DFVCP Overview
The DFVCP allows plan administrators to file late Form 5500s and pay reduced penalties. The standard penalty for late Form 5500 filing is $250/day (up to $150,000). DFVCP reduces the penalty to $750 per late return (up to $1,500 for multiple years). Plans that file under DFVCP receive a waiver of the standard penalty.
Proactive Use
Pro Tip
Proactive use of voluntary correction programs — correcting violations before they are discovered in an audit — demonstrates good-faith compliance and significantly reduces penalty exposure. If you identify a fiduciary violation or a late Form 5500, consult with ERISA counsel about using VFCP or DFVCP to correct the violation before the DOL discovers it.