DOL compliance fines for errors on your ERISA plan will get more expensive starting August 1st 2016 as the DOL recently published a new fine schedule. Errors of omission seem to be the principal target for retirement and healthcare plans.
Fines have not changed since 2003 and, responding to the 2015 Inflation Adjustment Act, the DOL has made the changes according to a set formula. Some of the penalties have increased dramatically including the failure to file a 5500 form, which has doubled, and the failure to supply required reports to employees, which has almost tripled in some cases.
The August 1st date reflects changes to fines for actions that have occurred on or after November 2nd 2015 – increases will be made annually starting in 2017.
Some experts believe that increases in DOL fines are a good thing as it might cause senior management to pay more attention to their 401k plans.
Best way to avoid these DOL compliance fines? Make sure that you are working with experienced professionals like advisors, TPAs and auditors that not only focus on 401k and 403b plans but also have the resources to follow through. Some record keepers may have significant plans under management but make sure that they focus on your plan size and that they provide personalized service if the company does not have the internal resources. There’s a lot of buzz about cheap online providers leveraging technology and low cost funds but if fines are levied, especially under the new DOL schedule, the price may not be so attractive.
And when all else fails, there is always the DOL’s Voluntary Fiduciary Correction Program. It’s much better to go to the DOL when mistakes are made than having them discovered by the DOL during an audit or based on complaints from employees.
