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Going Up but Never Down | 2018 ERISA Penalties

Summary

The Department of Labor announced increased penalties for employee benefit plans under ERISA. The increases generally apply to penalties that involve employee benefit reporting and disclosure failings if the penalty is assessed after January 2, 2018, and if the violation occurred after November 2, 2015. We’ve compiled a resource outlining the ERISA penalty amounts assessed for violations on or before January 2, 2018, and those amounts assessed after January 2.

In Depth

The Department of Labor (DOL) announced increased 2018 penalties for employee benefit plans under the Employee Retirement Income Security Act of 1974 (ERISA). The increases generally apply to penalties that involve employee benefit reporting and disclosure failures if the penalty is assessed after January 2, 2018, and if the violation occurred after November 2, 2015. As a background, the 2015 Inflation Adjustment Act directs the DOL to annually adjust for inflation certain penalties for specified ERISA violations.

The table below shows ERISA penalty amounts assessed for violations on or before January 2, 2018, and shows ERISA penalty amounts assessed after January 2, 2018.

ERISA Penalty Statute

Description of ERISA Violations Subject to Penalty

Prior Penalty Amount

New Penalty Amount

ERISA §209(b)

Failure to furnish reports (e.g., pension benefit statements) to certain former participants and beneficiaries or maintain records.

$28 per employee

Same

ERISA §502(c)(2)

Failure or refusal to properly file annual report (Form 5500) required by ERISA §104; and

Failure of a multiemployer plan to certify endangered or critical status under ERISA §305(b)(3)(C) treated as a failure to file annual report.

Up to $2,063 per day

Up to $2,097 per day

ERISA §502(c)(4)

Failure to notify participants under ERISA §10(j) of certain benefit restrictions and/or limitations arising under Internal Revenue Code §436;

Failure to furnish certain multiemployer plan financial and actuarial reports upon request under ERISA §101(k);

Failure to furnish estimate of withdrawal liability upon request under ERISA §101(l); and

Failure to furnish automatic contribution arrangement notice under ERISA §514(e)(3).

Up to $1,632 per day

Up to $1,659 per day

ERISA §502(c)(5)

Failure of a multiple employer welfare arrangement to file report required by regulations issued under ERISA §101(g).

Up to $1,502 per day

Up to $1,527 per day

ERISA §502(c)(6)

Failure to furnish information requested by the Secretary of Labor under ERISA §104(a)(6).

Up to $147 per day, not to exceed $1,472 per request

Up to $149 per day, not to exceed $1,496 per request

ERISA §502(c)(7)

Failure to furnish a blackout notice under ERISA §101(i) or a notice of the right to divest employer securities under ERISA §101(m).

Up to $131 per day

Up to $133 per day

ERISA §502(c)(8)

Failure by a plan sponsor of a multi-employer plan in endangered status to adopt a funding improvement plan or a multiemployer plan in critical status to adopt a rehabilitation plan. Penalty also applies to a plan sponsor of an endangered status plan (other than a seriously endangered plan) that fails to meet its benchmark by the end of the funding improvement period.

Up to $1,296 per day

Up to $1,317 per day

ERISA §502(c)(9)(A)

Failure by an employer to inform employees of Children’s Health Insurance Program (CHIP) coverage opportunities under ERISA §701(f)(3)(B)(i)(l); each employee is a separate violation.

Up to $110 per day

Up to $112 per day

ERISA §502(c)(9)(B)

Failure by a plan administrator to timely provide to any State the information required to be disclosed regarding coverage coordination under ERISA §701(f)(3)(B)(ii); each participant/beneficiary is a separate violation.

Up to $110 per day

Up to $112 per day

ERISA §502(c)(10)(B)(i)

Failure by any plan sponsor of a group health plan, or any health insurance issuer offering health insurance coverage in connection with the plan, to meet the requirements of ERISA §§702(a)(1)(F), (b)(3), (c) or (d); or §701; or §702(b)(1) with respect to genetic information.

$110 per day during non-compliance period

$112 per day during non-compliance period

ERISA §502(c)(10)(C)(i)

Minimum penalty for de minimisfailures to meet genetic information requirements not corrected prior to notice from the Secretary of Labor.

$2,745 minimum

$2,790 minimum

ERISA §502(c)(10)(C)(ii)

Minimum penalty for failures to meet genetic information requirements which are not corrected prior to notice from the Secretary of Labor and are not de minimis.

$16,473 minimum

$16,742 minimum

ERISA §502(c)(10)(D)(iii)(ll)

Cap on unintentional failures to meet genetic information requirements.

$549,095 maximum

$558,078 maximum

ERISA §502(c)(12)

Failure of Cooperative and Small Employer Charity Act (CSEC) plan sponsor to establish or update a funding restoration plan.

Up to $100 per day

Up to $102 per day

ERISA §502(m)

Distribution prohibited by ERISA §206(e).

Up to $15,909 per distribution

Up to $16,169 per distribution

ERISA §715

Failure to provide Summary of Benefits Coverage under Public Health Services Act §2715(f), as incorporated into ERISA §715 and 29 CFR 2590.715-2715(e).

Up to $1,087 per failure

Up to $1,105 per failure

© 2018 McDermott Will & Emery

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About this Author

Diane M. Morgenthaler, Corporate Tax Planning Attorney, Retirement Plans for Companies, McDermott Will Emery, Chicago Law Firm
Partner

Diane M. Morgenthaler focuses her practice on employee benefits and executive compensation. She represents clients in matters before the US Internal Revenue Service, the Department of Labor and the Pension Benefit Guaranty Corporation.

Diane serves as employee benefit counsel to Fortune 500 corporations and other global corporations, and represents both public and private clients. She regularly designs and implements a variety of employee benefit plans and programs. Diane has extensive experience in employee benefit issues involved in...

312-984-7676
Maureen O'Brien, McDermott Will Emery, qualified plan design Attorney, welfare Administration lawyer
Counsel

Maureen O'Brien is counsel in the law firm of McDermott Will & Emery LLP and is based in the Firm’s Chicago office.  She focuses her practice on advising clients on a broad range of employee benefits matters, including qualified plan design, welfare plan design, employee benefit plan compliance issues, fiduciary matters, multiemployer pension plan issues and nonqualified deferred compensation plans.

312-984-3242
stepanovic, chicago, associate
Associate

Rick Stepanovic focuses his practice on employee benefits and executive compensation matters. He has experience working on matters related to tax-qualified pension plans, health and welfare plans, and deferred compensation arrangements. He also has experience handling correction and administrative matters before the Internal Revenue Service and the Department of Labor.

While in law school, Rick was the Managing Editor of the Michigan Journal of Environmental and Administrative Law. He previously worked as a law clerk in the US Attorney’...

312-984-2054