Does the DOL’s New Self-Correction Option Require a Participant Notice?

Q: I recently read your Ask the Experts article on the new self-correction component, or SCC, of the Department of Labor’s Voluntary Fiduciary Correction Program. Does the SCC require a participant notice?

Kimberly Boberg, Kelly Geloneck, Emily Gerard and David Levine, with Groom Law Group, and Michael A. Webb, senior financial adviser at CAPTRUST, answer:

A: One of the key differences between the new self-correction component of the VFCP and the prior program is that, while the prior VFCP required a “notice to interested persons” with the “interested persons” including plan participants, the new SCC does NOT require such a participant notice. An SCC notice must be filed with the DOL, but that notice does not have to be distributed to participants. Having said that, since participants may be notified with respect to specific corrections that are made under the SCC (for example, corrections that require an account adjustment are often accompanied by a communication from the plan’s recordkeeper), a plan sponsor should work with outside ERISA counsel to address the merits of sending some sort of communication to participants to get out ahead of the actual corrections and related communication.

NOTE: This feature is to provide general information only, does not constitute legal advice and cannot be used or substituted for legal or tax advice.

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