DOL Expands Self-Correction Program for Benefit Plan Errors

Employee benefit plan administrators just received welcome news from the Department of Labor. The expanded self-correction program announced this week provides a clearer pathway for fixing compliance missteps before they escalate into costly enforcement actions.

For New York employers managing ERISA-covered plans, this development offers both immediate relief and strategic advantages. The question isn't whether plan errors occur—it's how quickly you can address them when they do.

What's New in the Self-Correction Program

The DOL's expanded self-correction program builds on the existing Delinquent Filer Voluntary Compliance (DFVC) Program but casts a much wider net. Plan administrators and officials can now voluntarily correct a broader range of eligible violations across health, welfare, and retirement plans.

The program addresses common operational stumbles that plague benefit plan administration:

• Filing errors or missed deadlines for required forms
• Deficient participant notices or communication failures
• Operational mistakes in plan administration
• Documentation gaps that don't reflect actual plan operations

Unlike punitive enforcement actions, this voluntary approach focuses on correction rather than punishment. Plan sponsors who identify and self-report eligible violations can significantly reduce or eliminate DOL penalties that would otherwise apply.

Immediate Benefits for Plan Administrators

The expanded program takes effect immediately, giving plan administrators a powerful compliance tool. Rather than waiting for DOL audits to uncover issues, proactive employers can clean up their plan administration and demonstrate good faith compliance efforts.

This voluntary correction mechanism particularly benefits smaller employers who may lack dedicated benefits compliance staff. Many operational errors stem from resource constraints rather than willful violations. The DOL's announcement specifically acknowledges this reality by emphasizing penalty reduction for non-willful errors.

Plan sponsors should verify their specific funding arrangements when reviewing potential corrections, as employer versus employee responsibility varies by plan design and may affect the correction approach.

Strategic Implications for New York Employers

New York employers face unique considerations when implementing self-corrections. While ERISA preempts conflicting state laws, many NY employers operate integrated benefit structures that coordinate federal plans with state-mandated programs.

Consider these NY-specific scenarios where self-correction provides strategic value:

Disability Benefits Integration: Employers coordinating ERISA disability plans with New York State Disability Benefits Law (DBL) can use self-correction to address notice deficiencies or calculation errors without triggering separate state enforcement reviews.

Paid Family Leave Coordination: Plans that integrate with NY Paid Family Leave require specific participant communications. Self-correction allows employers to fix notice problems federally while ensuring state compliance requirements remain intact.

Workers' Compensation Alignment: With New York's evolving workers' compensation mental health claim processes, employers can proactively address any coordination issues between ERISA plans and state programs through voluntary correction.

Unlike New York state benefit programs, which lack equivalent self-correction mechanisms, this federal tool provides a compliance advantage. NY employers can resolve integrated plan issues through DOL self-correction before potential state enforcement actions develop.

Practical Implementation Steps

Smart implementation requires systematic approach. Start by conducting internal plan audits to identify potential correction candidates. Common areas for review include:

• Form 5500 filing accuracy and timeliness
• Summary Plan Description updates and distributions
• COBRA notice procedures and timing
• Claims processing and appeal procedures
• Fiduciary governance documentation

Document your correction rationale thoroughly. The DOL will evaluate whether violations qualify for self-correction and whether your remedial actions adequately address identified problems.

Consider the timing strategically. While no fixed deadline exists, prompt self-reporting demonstrates good faith and maximizes penalty relief. Waiting until DOL investigation begins significantly reduces the program's benefits.

Business Size Considerations

The expanded program targets employers of all sizes, but practical benefits vary by organization. Larger employers with dedicated HR teams may identify correction opportunities through routine compliance reviews. Smaller businesses often discover issues reactively, making the penalty reduction aspects particularly valuable.

Small and mid-size New York employers should prioritize this compliance tool. Limited administrative resources make operational errors more likely, but the same resource constraints make DOL penalties more financially damaging. Self-correction provides proportionate relief where it's needed most.

Integration with Broader Compliance Strategy

Self-correction works best as part of comprehensive benefits compliance management. Rather than crisis response, treat it as ongoing risk mitigation. Regular plan administration reviews can identify correction opportunities before they become enforcement risks.

This proactive approach aligns with other recent compliance developments. Just as employers have adapted to increased ERISA penalties, the self-correction program provides a mechanism to avoid those penalties entirely through voluntary compliance.

The program also complements operational improvements in benefits administration. Employers investing in better systems and processes can use self-correction to address historical issues while preventing future violations.

Moving Forward

The expanded self-correction program represents a significant shift toward collaborative compliance rather than purely punitive enforcement. For New York employers managing complex benefit obligations, it provides both immediate relief and long-term strategic advantages.

Success requires moving beyond reactive compliance toward proactive plan governance. Regular reviews, prompt correction of identified issues, and documentation of good faith efforts create a compliance framework that benefits both employers and participants.

Given the program's immediate effectiveness and penalty reduction potential, plan sponsors should evaluate correction opportunities promptly. Early adoption demonstrates regulatory engagement and maximizes available relief.

Navigating self-correction requirements while maintaining ongoing plan operations requires experienced guidance. The interplay between federal correction procedures and New York state benefit obligations adds complexity that benefits from professional oversight.

Benton Oakfield's benefits compliance team helps Long Island employers implement strategic self-correction programs that address operational issues while strengthening overall plan governance. Our experience with New York's integrated benefit environment ensures corrections align with both federal requirements and state obligations.

Compliance Note: Benefit plan rules and tax implications vary based on company size and location. This summary is for informational purposes only. Please contact your Benton Oakfield representative to review how these changes impact your specific plan documents.

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