ERISA Statutory Penalties

Plan participant complaints alleging potential failures of fiduciary duty, and random or “for-cause” DOL investigations, can create a huge burden on plan administrators, often resulting in significant financial consequences.

The federal Employee Benefits Security Administration (EBSA) often encourages voluntary compliance as a means to correct violations and to restore any losses to employee benefit plans.

However, in cases where voluntary compliance efforts have failed, or that involve issues for which voluntary compliance is not feasible or appropriate, EBSA may forward a recommendation to the U.S. Solicitor of Labor’s Office to initiate litigation against the plan.

ERISA statutory penalties include (but are not limited to):

• Excise taxes on prohibited transactions;
• Monetary penalties for fiduciary breaches that can reach up to 20% of the recovery amount.
• See the 401(k) or Health and Wellness penalties charts for specific reporting and disclosure penalties.

ERISA criminal liability includes:

• For willful violations of ERISA’s reporting and disclosure requirements – up to $100,000 in fines per individual, and possible imprisonment of up to 10 years.
• For knowingly making false statements or concealing/failing to disclose any fact needed to prepare ERISA reports — fine (determined under federal sentencing guidelines) and possible imprisonment of up to 5 years.
• For coercive interference with a participant’s rights under an employee benefit plan — Up to $100,000 fine and/or 10 years imprisonment.
• Theft or embezzlement from an employee benefit plan — fine (determined under federal sentencing guidelines) and/or up to 5 years imprisonment.