The Employee Benefits Security Administration-Enforcement of ERISA Disclosure and Reporting Requirements
The Employee Retirement Income Security Act of 1974 (ERISA) regulates how private-sector employee benefit plans are administered and requires benefit plans to provide information about plans and changes to the plans to both the federal government and to plan participants and beneficiaries. The Employee Benefits Security Administration (EBSA), an agency of the United States Department of Labor, has the responsibility of administering the fiduciary, reporting, and disclosure provisions of ERISA. Prior to 2003, the EBSA was known as the Pension and Welfare Benefits Administration, which prior to 1986 was known as the Pension and Welfare Benefits Program. In 1986, the program was also upgraded to sub-cabinet classification. The EBSA also oversees the fiduciary and auditing aspects of the Thrift Savings Plan that was established under the Federal Employees' Retirement System Act.
In addition to enforcing fiduciary responsibilities of employee benefit plan administrators and sponsors, the EBSA also enforces the disclosure and reporting requirements of ERISA. The reporting requirements of ERISA were designed to provide detection and deterrence of abusive practices in connection with employee benefit plans. The EBSA reviews Form 5500 Annual Reports to make sure that all of the information contained in them is complete and accurate. If it is not and the form is rejected, plan administrators may be fined up to $1,000 per day until the appropriate information is provided.
The EBSA's Non-Filer Enforcement Program was established in 1993 to identify employee benefit plans that are governed by ERISA that have failed to comply with ERISA's annual reporting requirements. The EBSA considers the failure to file a possible indicator that the plan has been administered improperly and may not be properly funded, which could ultimately be disastrous for plan participants and beneficiaries. The objective of the Non-Filer Enforcement Program is not only to get plans to comply with current reporting requirements but to retroactively file any past reports required by ERISA and not previously filed. To facilitate its enforcement efforts, the EBSA encourages plan participants and beneficiaries who are not able to obtain their plans' annual reports to notify the EBSA.
Failure to file reports required by ERISA is considered egregious, and the fines for failure to file reflect that assessment. Plan administrators can be fined $300 a day up to a total of $30,000 per year for failure to file annual reports. Moreover, the fine is cumulative from year to year. The EBSA offers a Delinquent Filer Voluntary Compliance Program (DFVCP) to encourage voluntary compliance with ERISA's annual reporting requirements. Plan administrators who avail themselves of the program are allowed to pay an extremely reduced penalty by meeting their filing obligations. Originally $50 per day of failure to comply, the DFVCP fine was recently reduced to $10 per day. In addition, instead of a per-year maximum, the DFVCP imposes a plan maximum, which is also substantially less than would be normally be paid.
ERISA requires that employee benefit plans with more than 100 participants be audited on an annual basis by an independent qualified public accountant. The audited financial statements and the accountant's report on the fairness and consistency of the statements' presentation are required to be attached to the plan's annual reports. However, because the EBSA has determined that audits of independent qualified public accountants do not always meet professional standards, the EBSA has begun a program under which it conducts on-site reviews of the audits for randomly selected plans.
