The majority of U.S. employers with 100 or more employees do not comply with ERISA — leaving them wide open to a potential slew of federal fines, found a recent study.
The Employee Retirement Income Security Act (ERISA) imposes strict requirements on employers sponsoring 401(k), group life, medical, dental and disability plans to report financial information to the Department of Labor (DOL) on Form 5500.
U.S. Census Bureau reports show there are about 110,000 employers that employ 100 or more people — and public records show some 60,000 (55%) of these employers have not filed a Form 5500, according to a recent ERISA Pros’ study.
Could result in expensive penalties
An employer can be penalized by the DOL up to $1,100 for each day its Form 5500 is late. The penalty is cumulative and is applied separately to each benefit plan an employer offers.
That means fines can add up fast.
“An employer sponsoring life, medical, dental and disability insurance plans that flies its Form 5500s just 30 days late could be fined $132,000,” said Bernard Kearse of ERISA Pros. “If that employer earns 8% net after tax, it would have to generate $1,650,000 in sales revenue to pay for the government’s fine.”
