ERISA Compliance

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ERISA Compliance Regulations

The Employee Retirement Income Security Act of 1974 (ERISA) covers most voluntarily established private sector employee benefit plans. Private-sector employers are responsible for making sure their retirement plans comply with ERISA regulations. ERISA sets forth the minimum standards for these plans, which include defined contribution plans, defined benefit plans, 401(k)s, Employee Stock Ownership Plans(ESOPs), Simplified Employee Pension Plans (SEPs), and Profit Sharing Plans.

Basic ERISA compliance requires employers provide notice to participants about plan information, their rights under the plan, and how the plan is funded. This includes ensuring plans comply with ERISA's minimum standards, recordkeeping, annual filing and reporting, and fiduciary compliance. ERISA provides the minimum standards for participation, accrual of benefits, and vesting of benefits under the plan. Under ERISA, there is also a fiduciary duty for those who administer, manage, or control plan assets, requiring them to act solely in the interest of plan participants and beneficiaries. Failure to comply with ERISA requirements for qualified plans can expose a company to ERISA litigation and DOL or IRS penalties. Experienced ERISA legal counsel can help your company maintain ERISA compliance and avoid costly penalties.

ERISA Notice Requirements

ERISA requires certain minimum notice requirements to plan participants. This includes requiring that all participants receive a Summary Plan Description (SPD) within 90 days of his or her first day of coverage. SPDs must provide certain information, including the plan name, employer information, type of plan, designated agents, eligibility requirements, description of benefits, plan funding information, claims procedures, and statement of ERISA rights. In addition, employees must receive notice of any material changes to their benefit plans through a Summary of Material Modification (SMM) notice.

ERISA Reporting and Recordkeeping

Employers must maintain accurate records relating to their employee benefit plans. Under Section 107 of ERISA, all records related to government filings are to be retained and kept available for examination for a minimum of six years after the filing date. However, under Section 209, an employer must maintain benefit records related to employees for such a time as is sufficient to determine the benefits due to such employees.

Companies also have mandatory reporting requirements under ERISA. For plans with 100 participants or more, plan sponsors must annually file Form 5500 Annual Returns/Reports of Employee Benefit Plan. For plans with less than 100 participants, sponsors can use the short form 5500-SF.

A plan sponsor will file its Form 5500 electronically through the Department of Labor's EFAST system. The electronic filing satisfies ERISA and Internal Revenue Code (IRC) reporting requirements through providing a report of the plan's financial condition, investments, and operations. This includes information about the plan, plan name, plan year, a schedule of plan assets and liabilities, service providers, insurance costs and providers, participants, and financial data.

Employee ERISA Violation Claims

Employees and plan participants have minimum protections for claims procedures for employee benefit plans under ERISA. When an employee's claim is denied, the plan must provide adequate notice of the reason for the denial and give them an opportunity for a full and fair review. If the plan makes an adverse determination on the claimant's appeal, it must specify the reason for the decision and provide a statement of the claimant's right to bring legal action under ERISA.

ERISA Fiduciary Responsibilities

ERISA fiduciaries have an obligation to act in the sole interest of plan participants and beneficiaries. This includes defraying the reasonable costs of administering the plan, diversifying the investments to minimize the risk of large losses, following the terms of the written plan document, and avoiding conflicts of interest. The fiduciary is also responsible for monitoring investment performance and selecting investment options and providers.

ERISA Audits

The Employee Benefits Security Administration (EBSA) regularly conducts audits of benefit plans to investigate the plans and ensure compliance. Audits can be triggered by a review of Form 5500 or other reports, review of Summary Plan Descriptions, employee complaints, or even random audits. According to a Department of Labor report, about two-thirds of EBSA civil investigations result in monetary recovery or other corrective action. About one-fourth of criminal investigations resulted in guilty pleas or criminal convictions.

Penalties for ERISA Violations

EBSA enforces Department of Labor laws, including ERISA. Plan sponsors may be penalized by EBSA for ERISA violations. Penalties for ERISA violations may depend on the type of violation, the extent of the violation, and whether the violation was willful. Penalties for violations may include fines, payments to plan participants, and required changes to the company's practices and procedures. Plan administrators who fail to comply with annual reporting requirements are also subject to a penalty of up to $1,000 per day.

ERISA fiduciary violations may also subject the fiduciary to personal liability for losses to plan participants. Plan participants and beneficiaries have a right to take legal action against the plan manager, plan administrator, or others who control plan assets for a breach of fiduciary duty. Fiduciaries may also be liable to participants for lost earnings or improperly received profits.

Willful ERISA violations can even result in criminal prosecution. The maximum criminal penalties for ERISA violations include up to 10 years in jail and fines of up to $100,000. Companies charged with ERISA violations can face criminal fines of up to $500,000, in addition to any civil liability.

Voluntary ERISA Compliance Corrections

The Department of Labor has voluntary compliance programs for plan sponsors who discover a possible breach of ERISA requirements. This includes the Delinquent Filer Voluntary Compliance Program (DFVCP) and the Voluntary Fiduciary Correction Program (VFCP).

Delinquent Filer Voluntary Compliance Program

When a plan administrator has not complied with the ERISA annual reporting requirements, the DFVCP gives administrators a way to satisfy the requirements and avoid additional civil penalty assessments. By filing delinquent annual reports through the DFVCP, plan administrators can voluntarily pay a reduced penalty amount.

Eligibility for the DFVCP is limited to plan administrators with filing obligations under Title I of ERISA who have not already been notified by the DOL of their failure to file an annual report. Participation includes filing Form 5500 or 5500-SF Annual Returns/Reports of Employee Benefit Plan and submitting filing information and payment under the reduced penalty structure.

Voluntary Fiduciary Correction Program

If a fiduciary or plan sponsor discovers a possible fiduciary duty breach, they may correct their breach through the VFCP to avoid additional penalties. The VFCP allows fiduciaries to comply with ERISA regulations by taking corrective measures.

To seek relief from enforcement actions, fiduciaries are required to:

  • Identify any violations and determine whether they fall within the 19 categories of transactions covered by the VFCP;
  • Follow the process to correct any qualifying violations;
  • Calculate any losses or profits related to the violations and restore the amounts with interest; and
  • File an application with EBSA, including documentation showing that corrective action was taken.

San Diego ERISA Compliance Attorneys

At Butterfield Schechter LLP, we provide our clients with ERISA compliance counseling and other employee benefits counseling. Our attorneys will make sure your company and fiduciaries stay in compliance with ERISA rules and regulatory changes. Contact our office today with any questions on how we can help you and your company succeed.

ERISA Compliance Resources

What Would a Government Investigation Reveal About Your Retirement Plan?

Common Hazards of the IRS Voluntary Correction Program

ERISA Advisory Council Review of Mandated Disclosures

Five Common Mistakes of Plan Sponsors

Fiduciary Best Practices for Protecting Your Company

Avoid Costly Penalties for Late Form 5500

Managing Frozen Pension Plans

ERISA Retirement Plans May Not Protect Fraudulent Transfers

Prohibited Transactions for Fiduciaries After DOL Rule Change

Church-Affiliated Hospitals Win ERISA Exemption

The Recent Revamp of ERISA Disability Claim Regulations

Dodd-Frank and the Fiduciary Rule

ERISA Civil Penalties Inflation Adjustment Act Annual Adjustments for 2017

My Plan is Being Audited! Now What?

Retirement Plan Examinations and Enforcement Programs on the Rise: Guidance for Plan Sponsors

401(k) Safe-Harbor Hardship Distributions: Best Practices

Does ERISA Cover Your Church Plan?

Newly Issued Required Amendments Lists for Qualified Retirement Plans

2017 Retirement Plan Limits

Don’t Forget to Take Your 2016 RMD!

New Law Mandates Additional Disclosure by California Public Pension Plans

DOL Audits of Employee Benefit Plans

Important Upcoming Form 5500 Filing Deadlines

New Voluntary Correction Program Fee Schedule

IRS Updates EPCRS With Issuance of Rev. Proc. 2016-51

Retirement Plans

We help establish a customized plan that meets regulatory requirements as a tax qualified plan. Following implementation, our attorneys can assist clients and their plan administrator with regular reviews and updates to help with regulatory compliance for the plan's operation, and continued effectiveness in meeting the client's specific goals.


We are dedicated to employee ownership. When you come to us for ESOP services, you receive influential legal counsel who stand beside you to help you stay informed, in compliance, and abreast of the latest developments-all to help you realize your plan goals as fully and effectively as possible.


A QDRO is a specially designed court order that is required for the division of retirement benefits in a family law case. Many family law attorneys do not possess the expertise necessary to divide retirement benefits or stock options upon divorce. We have extensive experience in dividing qualified plans, government plans, IRAs and stock options between the employee spouse and non-employee spouse.

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