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What is the penalty amount to show in an ERISA-rights notice?


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A summary plan description's ERISA-rights notice includes this:

If you request materials from the Plan and don’t receive them within 30 days, you may file suit in a Federal court. In such a case, the court may require the Plan administrator to provide the materials, and pay you up to $nnn a day until you receive the materials, unless the materials were not sent because of reasons beyond our control.

What is the current amount?

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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The table of inflation-adjusted penalties is available here:

https://www.govinfo.gov/content/pkg/FR-2023-01-13/pdf/2023-00271.pdf

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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Peter, interesting question because there are two penalties under the heading of failure to provide an SPD upon request. 

Your question relates to when a participant requests an SPD.  The DOL sets the amount in §2575.502c-1 - Adjusted civil penalty under section 502(c)(1) at $110 per day.  Per the EOB, that number is not indexed and has been constant for while.  Common literature references this as a DOL penalty (it is set by the DOL) but you correctly note it is the court that can direct the payment of this amount to the participant.  I believe that the penalty is based on days exceeding 30 days of receipt of the participants, but I don't have a handy source to confirm.

The DOL has its own penalty if the DOL requests the SPD and the plan does not provide it to the DOL.  This is under §2575.2(e) and is indexed.  The current amount is $184 per day, not to exceed $1,846 per request (as confirmed in the link above from C.B. Zeller to the 2023 adjustments).

 

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The paragraph I quoted above is from the model ERISA-rights notice in the Labor department's SPD-contents rule.

https://www.ecfr.gov/current/title-29/subtitle-B/chapter-XXV/subchapter-C/part-2520/subpart-B/section-2520.102-3

That rule shows the amount as $110. Thank you for confirming it is not inflation-adjusted.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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Side note - one of our attorneys always wanted us to spell out the amount (one hundred ten dollars vs $110) in the hopes that it wouldn't jump out as much and entice a participant to file suit. 

In recent years, another of our attorneys uses this language instead: "In such a case, the court may require the plan administrator to provide the materials and pay you a penalty up to a certain amount per day until you receive the materials, unless..."

Nonetheless, in 35 years of practicing benefits, I've never personally seen a case where this has happened. Of course, we tell all our clients that they need to provide the SPD promptly if requested.

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You may find this case interesting reading - https://casetext.com/pdf-email?slug=brooks-v-metrica-inc and any of the 20 citing cases.

It is somewhat aged, but it includes references to other cases that helped set precedents.  Most TPAs and plan sponsors are not likely see the assessment of the penalties since they occur at the direction of the court primarily as part of litigation associated with an individual participant's claim.

It is worth noting in the above case that the 30-day clock started ticking when the participant made an oral request for the SPD. 

The penalties are real and exist because there are plans that are unresponsive to participant requests.  I imagine most attorneys who handle claims cases are aware of the penalty and let their clients know about it whether or not the penalty amount is numeric, is spelled out, or is referred to generically as an amount in the SPD.

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