February 4, 2019

Updated Penalty Amounts for ERISA 401(K) and Welfare Plans

On January 23, 2019, the DOL published annual adjustments to the civil monetary penalties for certain ERISA violations applicable to 401(k) plans. Legislation enacted in 2015 requires these adjustments to be issued by January 15 of each year, but the government shutdown prevented the DOL from meeting the statutory deadline this year*. Updated penalty amounts for Health & Welfare Plans are also outlined in the following chart:

Compliance Failure
401 (K) Penalties
2018
2019
Failure to timely file Form 5500[1]
$2,140 per day
$2,194 per day
Failure to provide required notice to participants for plans with automatic contributions
$1,693 per day
$1,736 per day
Failure to provide a “blackout” notice[2]
$136 per day
$139 per day
Failure to provide a “diversification” notice[3]
$136 per day
$139 per day
Failure to comply with ERISA’s general record retention & reporting requirements
$29 per affected employee
$30 per affected employee
Compliance Failure
Health & Welfare Plan Penalties
2018
2019
Failure to timely file a properly completed ERISA Form 5500 (if applicable)
$2,140 per day
$2,194 per day
Failure to file a 1094 or 1095 return or furnish a statement (if applicable)
$260 per return/statement
$270 per return/statement[4]
Failure to furnish an SPD to the DOL upon request
$152 per day[5]
$156 per day[6]
Failure to furnish an SPD to a participant upon request
$110 per day
$110 per day[7]
Failure to timely distribute a Summary of Benefits and Coverage (SBC)
$1,128 per failure[8]
$1,156 per failure[9]
Failure to timely provide certain COBRA notices[10]
$110 per day per qualified beneficiary
$110 per day per qualified beneficiary
Failure to charge appropriate COBRA premiums and provide required levels of coverage[11]
$110 per day per qualified beneficiary
$110 per day per qualified beneficiary
Failure to comply with various ACA mandates
$100 per participant per day
$100 per participant per day[12]
HIPAA violation
$110 per participant per day excise tax
$110 per participant per day excise tax
Failure to provide notice & information regarding the Children’s’ Health Insurance Program (CHIPRA)
$114 per participant per day
$117 per participant per day[13]
GINA violation
$114 per participant per day
$117 per participant per day[14]
$2,919 minimum penalty (de minimus violations[15] )

[1] Maximum penalty per day

[2] Generally, this notice is required to be distributed to participants in advance of certain periods during which participants are not permitted to make investment changes, or to receive plan loans or distributions

[3] Generally, to be distributed to participants in 401(k) plans that have employer stock as an investment option

[4] Maximum penalty up to $3, 275, 500.

[5] Fee shall not exceed $1,527 per request. Penalty begins on the 31st day after the request is made

[6] Fee shall not exceed $1,566 per request. Penalty begins on the 31st day after the request is made

[7] Penalty begins on the 31st day after the request is made

[8] Penalty calculated on a per participant or beneficiary basis

[9] Id.

[10] DOL penalty

[11] IRS excise tax penalty; minimum excise tax will be the greater of $2.500 for each qualified beneficiary affected or $100 per day during the employer’s non-compliance period.

[12] Excise tax penalty applied daily during non-compliance period.

[13] Id.

[14] Id.

[15] Applicable to violations not corrected prior to notice from the DOL

*2019 adjustments are effective for penalties assessed after January 23, 2019 (the date of publication), as applied to violations occurring after November 2, 2015.

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