The Pension Benefit Guaranty Corporation (PBGC) has published proposed regulations updating the existing policies on assessing and imposing penalties on pension plans.[1]
As background, the PBGC generally follows the policies released in 1995 as well as internal documentation for assessing penalties on late information filings. To encourage self-reporting, most of the assessed penalties are significantly below the maximum amounts allowed under section 4071 of ERISA (the maximum daily penalty amount is currently $2,739, updated annually for inflation).
Proposed policy
As before, for most failures to timely provide required notices or information, the PBGC will assess penalties that are significantly below the maximum allowable amounts. Some elements of the proposal remain unchanged, for example, the $25 per day starting penalties for certain lower-risk reportable events such as late reporting of active participant head count reduction. Other proposed updates, however, would make late reporting more costly, for example, the $100 per day tier of penalties for late contributions and the $1,000 per day tier of penalties for late Form 200 filings and all advance notice reportable events. The charts in the proposal's preamble summarize these changes.
Note that unlike the 1995 policy, these amounts would be subject to automatic annual inflation adjustments. As with the 1995 policy, these are the default values but can be increased up to the statutory maximum if there are aggravating factors, such as willful lack of reporting. The PBGC also notes that if the information was already known to the PBGC, it may choose to completely waive a penalty.
Waiver approach
As noted in the preamble, the PBGC has been extremely lenient in granting waivers of penalties in the past. Complete or partial waivers are still possible under the proposed regulations, based on the facts and circumstances in each case, but they appear to be less lenient than the current policy.
Going forward
Employer retirement plan sponsors should be aware of these proposed regulations, especially those sponsors that are non-public and subject to advance reporting, as many penalties may become more substantial than in the past. The 60-day comment period is open until September 21, 2026.
Footnote
- The proposal updates policies on failure to provide required information (1995), failure to provide premium-related information (1996) and failure to provide plan termination information (1997). The proposal makes no changes to the existing policy for late payment of premiums (as distinguished from a late premium filing). Return to article
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