Table of Adjusted Penalties for Violations of Select ERISA Requirements

The below table reflects the DOL's 2019 annual inflation adjustments to the civil money penalties for violations of certain requirements under ERISA, effective January 23, 2019.

ERISA Provision	Description of Violation	Maximum 2019 Penalty (As Adjusted)
ERISA § 209(b) (29 U.S.C. §1059(b))	Failure to furnish certain reports (such as pension benefit statements) or to maintain records	$30
ERISA § 502(c)(2) (29 U.S.C. § 1132(c)(2))	Failure or refusal to properly file a plan's annual report (Form 5500)	$2,194
ERISA § 502(c)(4) (29 U.S.C. § 1132(c)(4))	Failure to (i) notify participants of certain benefit restrictions or limitations under Internal Revenue Code (Code) Section 436(f); (ii) for multiemployer plans, (A) provide certain financial and actuarial reports and (B) provide estimates of withdrawal liability; and (iii) furnish automatic contribution arrangement notices (QACA notices) (see Standard Document, Safe Harbor Notice for Qualified Retirement Plans with Optional QACA Provisions)	$1,736
ERISA § 502(c)(5) (29 U.S.C. § 1132(c)(5))	Failure of a multiple employer welfare arrangement (MEWA) to file an annual report	$1,597
ERISA § 502(c)(6) (29 U.S.C. § 1132(c)(6))	Failure to provide information requested by the Secretary of Labor under ERISA Section 104(a)(6)	$156 per day, not to exceed $1,566 per request
ERISA § 502(c)(7) (29 U.S.C. § 1132(c)(7))	Failure to provide a required blackout notice and notice of right to divest employer securities (see Standard Document, Blackout Notice)	$139
ERISA § 502(c)(8) (29 U.S.C. § 1132(c)(8))	Failure of multiemployer plan in endangered status to adopt a funding improvement plan (or if in critical status, a rehabilitation plan) Failure also applies to an endangered status plan (that is not a seriously endangered status plan) that fails to meet its benchmark by end of funding improvement period (see Practice Note, Multiemployer Pension Plans)	$1,378
ERISA § 502(c)(9)(A) (29 U.S.C. § 1132(c)(9)(A))	Per day failure by an employer to inform employees of CHIPcoverage opportunities under ERISA Section 701(f)(3)(B)(i)(l) (each employee a separate violation)	$117
ERISA § 502(c)(9)(B) (29 U.S.C. § 1132(c)(9)(B))	Per day failure by a plan to timely provide to any state information required to be disclosed under ERISA Section 701(f)(3(B)(ii) (each participant or beneficiary a separate violation)	$117
ERISA § 502(c)(10) (29 U.S.C. § 1132(c)(10))	Failure by any plan sponsor of a group health plan, or any health insurer offering coverage in connection with the plan, to satisfy ERISA's requirements regarding genetic information (multiple subparts) (see Practice Note, GINA Compliance for Health and Welfare Plans)	$117 $2,919 $17,515 $583,830
ERISA § 502(c)(12) (29 U.S.C. § 1132(c)(12))	Failure of a Cooperative and Small Employer Charity (CSEC) plan sponsor to establish or update a funding restoration plan	$107
ERISA § 502(m) (29 U.S.C. § 1132(m))	Prohibited distribution under ERISA Section 206(e)	$16,915
ERISA § 715 (29 U.S.C. § 1185dand 42 U.S.C. § 300gg-15)	Failure to provide required Affordable Care Act (ACA) summaries of benefits and coverage (SBCs) (Section 2715 of the Public Health Service Act; 42 U.S.C. § 300gg-15) (see Practice Note, Summaries of Benefits and Coverage Under the ACA)	$1,156

Solo 401k Plan: Your Opportunity for Checkbook Control of Your Future

New IRS Fees for Private Letter Rulings, Plan Terminations, EPCRS -VCP submissions

New Fees

Internal Revenue Service ("IRS") issued Revenue Procedure 2019-1, Revenue Procedure 2019-2, Revenue Procedure 2019-3, Revenue Procedure 2019-4, Revenue Procedure 2019-5 and Revenue Procedure 2019-7.

These Revenue Procedures became effective January 2, 2019, and update the annual Revenue Procedures, which set forth the procedures for Determination Letter requests and Private Letter Ruling requests.

• ·        User fee to submit a request for a Private Letter Ruling, under the jurisdiction of the Associate Chief Counsel, will be increased from $28,300 to $30,000,
• ·        Effective July 1, 2019, the user fee to submit an Application for Determination for a Terminating Plan (IRS Form 5310) will be increased from $2,300 to $3,000.
• ·        User fee to submit a request for a Private Letter Ruling, under the jurisdiction of the Employee Plans Office, remains at $10,000;
• ·        User fee to submit a request for a determination letter for an individually designed plan remains at $2,500;
• ·        User fee for regular submissions, under the Voluntary Correction Program ("VCP") under the Employee Plans Compliance Resolution System ("EPCRS"), remains the same ($1,500 for plans with assets of $500,000 or less.
If you need assistance with these procedures, please do not hesitate to contact our offices


Solo 401k Plan: Your Opportunity for Checkbook Control of Your Future

The "Fake IRS" Approved IRA Investments

 Fraudulent “IRA Approved” Sales Pitch
“This investment has been approved for your IRA. You can use your IRA for this investment by filling out the forms in the attached information package, and our agent will take care of the rest. This has been reviewed by the government (or IRS).
This investment is so safe you can use it for your IRA. Only certain investments are approved for IRAs.”

The IRS ONLY issues letters to IRA sponsors, trustees, or custodians  to certify they are complying with requirements concerning investor rights, account administration, and standards for documents that allow deductible contributions.
The IRS does not:
„ review or approve investments.
„ endorse any investments.
„ advise people on how to invest their IRAs.

 North American Securities Administrators Association recommends:"
„ Exercise extra caution during the tax season when it comes to making IRA investments.
„ Avoid any investment touted as “IRA Approved” or otherwise endorsed by the IRS.
„ Don’t buy an investment on the basis of a television “infomercial” or radio advertisement.
„ Beware of promises of no-risk, sky-high returns on exotic investments for your retirement account.
„ Never transfer or rollover your IRA or other retirement funds directly to an investment promoter.
„ Proceed with caution when you are encouraged to invest in a “general partnership” or “limited liability company.”
„ Don’t be swayed by the fact that a bank or trust department is serving as an IRA custodian.
„ Always check out an investment and promoter before you turn over your money."


Solo 401k Plan: Your Opportunity for Checkbook Control of Your Future

Relief from 401k Loan, Contribution and Distribution Regulations

Relief for Plan Sponsors and Participants Affected by Hurricane Harvey

 The IRS issued Announcement 2017-11 for participants and plan sponsors affected by Hurricane Harvey.

Specifically: 

LOANS AND WITHDRAWALS

Plans that do not have the language may grant loans and/or hardship withdrawals between August 23, 2017 and January 31, 2018.
The plan administrator can grant the loan or hardship withdrawal before the normal document and procedure requirements are satisfied.  If applicable, normal spousal consent rules continue to apply.
The 6-month employee deferral suspension normally required for hardship withdrawals are not applicable.

CONTRIBUTIONS
The Dept Of Labor will not consider it a violation if the contribution / loan repayment deposit is delayed solely due to Hurricane Harvey, provided the employer and payroll provider act prudently to deposit the funds as soon as practicable.

NOTICES
The DOL will not treat a violation for failure to give notice of blackout periods related to Hurricane Harvey.



The IRS and Dept of Labor encourage employers to make reasonable accommodations for employees to avert the loss of benefits, and they will give grace periods where appropriate when it is not possible to be in compliance with the plan’s pre-established time frames under the plan’s normal claim and appeal procedures due to Hurricane Harvey.




Solo 401k Plan: Your Opportunity for Checkbook Control of Your Future

Hardship Withdrawals and Excess Contributions- The Error and Correction

Solo 401k

 A participant takes a Solo 401k hardship withdrawal and salary deferrals continue. The error is an operational failure, meaning the plan is failing to operate within the terms of the plan document. Treasury Regulation 1.401(k)-1(d)(3) requires that participants wait six months from receiving a distribution to resume contributions.

The correction rules concerning excess allocations apply. Under the excess contribution rules, the plan returns the deferrals, plus any earnings, from the day they were contributed to the day they are distributed. Use Code E on the 1099R, meaning the money is taxed in the year it is distributed. There’s no pre age 59 1/2 10% tax penalty for early distributions.

If the excess deferrals are matched by the employer, it gets more involved. If the match is fixed, the employer deducts the match contribution and any earnings and puts the money into  a forfeiture account for future contributions.

What to do..
Payroll services, unaware of the solo 401k plan provisions, are usually the cause of continued excess deferrals. Solo-k sponsors should establish payroll procedures and see that they are followed.


Solo 401k Plan: Your Opportunity for Checkbook Control of Your Future

Exception to the IRA Pro-Rata-Rule

Solo 401k

Usually, when you take an IRA distribution, all of your IRAs are considered one big IRA
 ( except Roth IRAs).
You may rollover just your taxable IRA funds to your solo-k plan as the solo-k plan allows for it.

You can only fund each of these distribution with the taxable part of your IRA. The pro-rata rule will not apply. Instead, the distribution will consist only of taxable IRA funds.

Example:
Sam has $250,000 in his only IRA. His IRA includes $150,000 in after-tax funds. Sam’s solo-k plan allows rollovers from IRAs. Sam rolls over $100,000 to his solo-k plan. The pro-rata formula does not apply. Instead, the entire $100,000 amount will be pre tax. This means that the $150,000 left in Sam’s IRA is considered to be after-tax funds. Sam will not have a tax bill when he takes any of these funds from his IRA.

Solo 401k Plan: Your Opportunity for Checkbook Control of Your Future

IRS Clarifies Missing Participant Form 5500 Reporting

Solo 401k

The Internal Revenue Service (IRS) announced that filers who have made a concerted effort to locate missing participants due benefit payments will enjoy a lower reporting burden associated with the missing individuals.

Plan sponsors, going forward, until further guidance guidance, “do not need to report on Lines 4I of the Schedule H and I to the Form 5500 and 10f of the Form 5500-SF unpaid required minimum distribution (RMD) amounts for participants who have retired or separated from service, or their beneficiaries, who cannot be located after reasonable efforts or where the plan is in the process of making reasonable contacting efforts at the end of the plan year reporting period.”





Solo 401k Plan: Your Opportunity for Checkbook Control of Your Future