Compliance Reminder
ERISA is a complex federal law, and employers should always seek guidance from qualified ERISA counsel when applying these rules to their own benefit plans. This content is provided for informational purposes only and does not constitute legal advice.
Enforcement Overview
ERISA grants the U.S. Department of Labor (DOL) primary enforcement authority over employer-sponsored welfare and retirement plans. The DOL’s Employee Benefits Security Administration (EBSA) investigates potential violations, ensures participant protections, and may impose civil or criminal penalties for noncompliance.
While penalties matter, employers often face greater exposure through audits, corrective action plans, and participant lawsuits. These carry reputational and administrative costs that far exceed the dollar penalties alone.
Types of Enforcement
Civil Enforcement
EBSA conducts investigations and may assess civil penalties for specific failures such as late filings, missing notices, or lack of required documentation.
Participant Rights
Plan participants can file complaints, request copies of plan documents, and even bring civil actions in federal court for benefits due or breaches of fiduciary duty.
Federal Preemption Advantage
ERISA preempts most state law claims, keeping disputes in federal court and generally shielding employers from “bad faith” and punitive damages common in state insurance lawsuits.
Common ERISA Penalties
The Department of Labor (DOL) adjusts ERISA civil monetary penalties each year to account for inflation. These updates are published by the Employee Benefits Security Administration (EBSA) and generally take effect for violations assessed after January 15 of each calendar year.
ERISA penalties can apply to a wide range of compliance failures – such as failing to file Form 5500, not furnishing required Summary Plan Descriptions (SPDs) or notices, or withholding requested plan information from participants. Because penalties vary by violation type and may depend on the plan year in which the infraction occurred, the exact dollar amount and timing can be complex.
Employers and plan administrators should always consult qualified ERISA legal counsel or tax professionals when evaluating how these penalties may apply to their plans.
For the most current penalty amounts and adjustment details, refer directly to the official DOL/EBSA fact sheet: EBSA Fact Sheet: Adjusting ERISA Civil Monetary Penalties for Inflation
Important Note: ERISA penalty amounts are updated annually for inflation and apply differently depending on the plan year and the timing of the violation. Always review the latest official DOL/EBSA guidance to confirm current penalty levels before citing or applying them.
Audit Risk and Corrective Action
Most DOL audits arise from random selection, participant complaints, or inconsistencies in Form 5500 filings. During an audit, the DOL will typically request:
- ERISA plan document(s) and SPDs (or wrap plan).
- Annual Form 5500 filings and proof of delivery.
- Evidence of required notices and distributions.
- Proof of fiduciary oversight and timely remittance of employee contributions.
If violations are found, the DOL often offers a Corrective Action Plan (CAP) opportunity before assessing civil penalties. Voluntary correction and cooperation can greatly reduce fines.
You can review the DOL’s official “Compliance Assistance Guide” to understand what examiners look for and how penalties are applied: Compliance Assistance Guide – Appendix A: Self-Compliance Tools
Key Takeaways
- The real risk of ERISA violations often lies in audits, corrective actions, and litigation, not just fines.
- 17 published penalties serve as the baseline, but actual enforcement can extend beyond these categories.
- Documentation, disclosure, and fiduciary process are the best defense.
- Employers should consult ERISA counsel or compliance experts before responding to DOL inquiries or audit requests.