Making Sure It Hurts: 2021 Increased Penalties for ERISA Violations

Überblick


Inflation-Adjusted Penalties Announced by the Department of Labor

The Federal Civil Penalties Inflation Adjustment Act of 2015 directs the US Department of Labor (DOL) to make annual inflation adjustments to specified Employee Retirement Income Security Act (ERISA) violations. The increased penalties generally apply to reporting and disclosure failures if the penalty is assessed after January 15, 2021, and if the violation occurred after November 2, 2015. The table below compares penalty amounts assessed for violations after January 15, 2020, through January 15, 2021 (the column labeled 2020 Penalty Amount), to penalty amounts assessed after January 15, 2021 (the column labeled 2021 Penalty Amount).

DOL PENALTIES
ERISA Penalty Statute Description of ERISA Violations Subject to Penalty 2020 Penalty Amount 2021 Penalty Amount
ERISA §209(b) Failure to furnish reports (e.g., pension benefit statements) to certain former participants and beneficiaries or maintain records. $31 per affected participant and beneficiary $31 per affected participant and beneficiary
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 $2,233 per day Up to $2,259 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 $1,767 per day per affected participant Up to $1,788 per day per affected participant
ERISA §502(c)(5) Failure of a multiple employer welfare arrangement to file report required by regulations issued under ERISA §101(g). Up to $1,625 per day Up to $1,644 per day
ERISA §502(c)(6) Failure to furnish information requested by the Secretary of Labor under ERISA §104(a)(6). Up to $159 per day, not to exceed $1,594 per request Up to $161 per day, not to exceed $1,613 per request
ERISA §502(c)(7) Failure of a defined contribution plan 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 $141 per day per affected participant Up to $143 per day per affected participant
ERISA §502(c)(8) Failure by a plan sponsor of a multiemployer 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 $1,402 per day Up to $1,419 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). Up to $119 per day per affected employee Up to $120 per day per affected employee
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). Up to $119 per day per affected participant and beneficiary Up to $120 per day per affected participant and beneficiary
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. $119 per day during non-compliance period $120 per day during non-compliance period
ERISA §502(c)(10)(C)(i) Minimum penalty for de minimis failures to meet genetic information requirements not corrected prior to notice from the Secretary of Labor. $2,970 minimum $3,005 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 more than de minimis. $17,824 minimum $18,035 minimum
ERISA §502(c)(10)(D)(iii)(ll) Cap on penalty for unintentional failures to meet genetic information requirements. $594,129 maximum $601,152 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 $109 per day Up to $110 per day
ERISA §502(m) Defined benefit distribution prohibited by ERISA §206(e) due to an impermissible forfeiture following withdrawal of a participant’s contributions. Amount distributed but not more than $17,213 per distribution Amount distributed but not more than $17,416 per distribution
ERISA §715 Failure by a group health plan 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 $1,176 per failure Up to $1,190 per failure

For more information on any of these potential penalties, please contact your McDermott lawyer or one of the below authors.