In December 2022, the U.S. Department of Labor (DOL) announced that Employee Benefits Security Administration (EBSA) investigators, in the enforcement of the Employee Retirement Income Security Act of 1974 (ERISA), recovered more than $1.4 billion for ERISA complaints and other benefits violations in fiscal year 2022. Funds were distributed to participants under retirement, health, and welfare benefits plans. ERISA complaints can result in significant fines and penalties if violations are found. In order to help prevent such ERISA violations, the DOL recently proposed updates to its Voluntary Fiduciary Correction Program to allow fiduciaries to self-correct specific transactions like late deposits to a 401(k) plan.
The Employee Retirement Income Security Act of 1974
ERISA gives EBSA authority to protect employee retirement investments. In brief, federal law sets minimum standards for private industry plans. Among the retirement plan requirements set forth by ERISA are fiduciary responsibilities for managers and controllers of plan assets. Specifically, ERISA requires plan fiduciaries to act in the financial interests of plan participants. To that end, plan fiduciaries must take professional care when choosing investment options for inclusion in 401(k) plan menus. In fact, these obligations of prudence and loyalty are called “the highest known to the law.” Pension plans alone hold $12 trillion in assets. And in the end, fiduciaries are personally liable for any losses resulting from a breach of duty.
Overall, EBSA oversees approximately 747,000 retirement plans, 2.5 million health plans, and 673,000 other welfare benefit plans. In sum, these plans cover 152 million workers, retirees, and dependents.
EBSA Enforcement Fact Sheet
EBSA published a fact sheet providing an overview of its fiscal year 2022 enforcement actions. Specifically, the fact sheet covers actions taken from October 1st, 2021, to September 30th, 2022. The following figures break down EBSA’s more than $1.4 billion in recoveries for plan participants. In detail, the agency reported:
- 907 civil investigations closed, with 595 resulting in monetary recoveries totaling $542 million
- $931 million recovered through EBSA investigations
- Recovery of $422.1 million in total benefits from individual complaints
- $83.9 million recovered through the Abandoned Plan program
- Voluntary Fiduciary Correction Program recoveries of $8 million
Through its enforcement of ERISA, the Employee Benefits Security Administration is responsible for ensuring the integrity of the private employee benefit plan system in the United States. According to EBSA, these results demonstrate a strong, fair, and effective program that protects the benefits of America’s workers, retirees, and their families.
Employer Takeaways
Fiduciaries and employers should ensure that plan assets are always managed in the financial interests of plan participants and employees. Finally, employers should review the retention requirements for employee benefit records under ERISA so that related documentation is sufficient to determine the benefits due or which may become due to such employees.