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DOL Increases Penalties for Late 5500 Filings and SBC Violations

The DOL has issued regulations that increase the civil monetary penalties for a wide range of benefit-related violations. Recognizing that many penalties were becoming less effective as deterrents because the penalty amounts had not kept pace with inflation, Congress enacted legislation in 2015 requiring an initial “catch-up” adjustment to specified penalty amounts, followed by annual adjustments. These regulations establish the catch-up amounts. Future adjustments will be made by January 15 of each year, starting in 2017.

Two important changes are:

  • Form 5500:The maximum penalty for failing to file Form 5500 (which must be filed by most ERISA plans) will increase from $1,100 to $2,063 per day that the Form 5500 is late. Voluntary delinquent filing will still be available and is encouraged for late filings.
  • Group Health Plans:The maximum penalty for failing to provide the summary of benefits and coverage (SBC) required under health care reform will increase from $1,000 to $1,087 per failure.

The increases apply to penalties assessed after August 1, 2016 with respect to violations occurring after November 2, 2015. Penalty assessments made before August 1, 2016 (including those relating to violations after November 2, 2015) and assessments at any time relating to violations on or before November 2, 2015 will reflect the lower pre-adjustment amounts.

If you have questions, please contact your AHT Account Manager or Gary Gray at ggray@ahtins.com or (888) 807.4018.