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$2,586 per day!


Peter Gulia

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ERISA § 502(c)(2)’s civil penalty for a failure to file an annual report is $2,586 per day.

88 Fed. Reg. 2210, 2219 (Jan. 13, 2023).

If a plan’s administrator is off by one year and three weeks, that’s about $1 million.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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Yeah that is  why the DOL program that caps the fine is so important. 

It used to be you could try to ask for some kind of forgiveness but at this point the down side is too much.

Likewise the filing a form without the auditor's report but a note is getting riskier also.   That fine for an information return with no tax implications is just plain silly

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On 1/23/2023 at 8:34 PM, Peter Gulia said:

ERISA § 502(c)(2)’s civil penalty for a failure to file an annual report is $2,586 per day

Note the penalty is UP TO $2,586/day.

I would think the administrator would have to be extremely recalcitrant in not filing to extract that sort of penalty.

Has anyone seen the max penalty applied by either the IRS or DOL?

QKA, QPA, CPC, ERPA

Two wrongs don't make a right, but three rights make a left.

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Congress last set an amount ($1,000) for the ERISA § 502(c)(2) penalty in 1987.

I was then active in lobbying. I don’t remember any trade organization or particular business putting an effort into persuading Congress not to set that penalty amount.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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As mentioned, the annually-increased penalties are mandated by law. See the The Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, and also this EBSA fact sheet.

Therefore, reducing the penalties would require a change in the law, which means an act of Congress.

Any bill which proposes to reduce the penalties would have to be scored on its budget impact over 10 years. Reducing the penalties would reduce revenue, so it would have to be offset by some other revenue-raising measure. We got a taste of some of those revenue raisers in SECURE 2.0, including such unpopular additions as Roth catch-ups.

What would you be willing to give up in order to reduce these penalties?

Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance.

Corey B. Zeller, MSEA, CPC, QPA, QKA
Preferred Pension Planning Corp.
corey@pppc.co

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