The DOLand the IRS have increased the cost of penalties for 401(k) andbenefits plan non-compliance. (Photo: Shutterstock)
Just after the New Year, the United States Department of Labor(DOL) issued a final rule increasing ERISA's noncompliancepenalties.
In Department of Labor Federal Civil Penalties InflationAdjustment Act Annual Adjustments for 2018, 83 Federal Register 7 (Jan. 2, 2018), the DOLannounced the annual adjustments that apply to penalties assessedafter Jan. 2 for certain violations that occurred after Nov. 2,2015. On the same day, the Internal Revenue Service (IRS)released Revenue Procedure 2018-4 which revamps theuser fee schedule for qualified plan failures submitted to the IRSVoluntary Correction Program (VCP) for compliance statementspursuant to the Employee Plans Compliance Resolution System(EPCRS), set out in Revenue Procedure 2016-51. The IRS announcement isespecially significant because the Revenue Procedure eliminatesreduced fees for common compliance errors in qualified plans like401(k) plans and defined benefit plans.
Increased ERISA penalties
Increased penalties should encourage employers to pay closerattention to the routine plan processes that create operationalrisks and address compliance concerns immediately so that the newpenalties do not (themselves) become an issue.
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