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ERISA Tips: ERISA Violations

By John Iekel • March 19, 2018 • 0 Comments
Editor’s Note: ERISA Tips is a feature provided with you in mind — to make the newsletter more useful to you! If you have any content for ERISA Tips or the 403(b) Advisor that you would like to contribute or suggest, please contact John Iekel, editor of the 403(b) Advisor, at

The Department of Labor’s Employee Benefits Security Administration (EBSA) exists to serve benefit plans and participants — a function that includes enforcing ERISA and the regulations that implement it, which can entail investigating criminal violations regarding employee benefit plans.

Following is a brief outline of civil and criminal violations that can take place.

ERISA Civil Violations

Civil violations of ERISA applicable to both pension and welfare plans include:

  • failing to operate the plan prudently and for the exclusive benefit of participants;

  • using plan assets to benefit certain related parties to the plan, including the plan administrator, the plan sponsor, and parties related to these individuals;

  • failing to properly value plan assets at their current fair market value, or to hold plan assets in trust;

  • failing to follow the terms of the plan, unless inconsistent with ERISA;

  • failing to properly select and monitor service providers;

  • taking any adverse action against an individual for exercising his or her rights under the plan (e.g., being fired, fined or otherwise being discriminated against); and

  • failure to comply with ERISA Part 7 and the Affordable Care Act (welfare plans only).

ERISA Criminal Violations

ERISA sections that concern criminal violations include:

  • Section 411, Prohibition Against Certain Persons Holding Certain Positions;

  • Section 511, Coercive Interference. Persons convicted of violations enumerated in section 411 are subject to a bar from holding plan positions or providing services to plans for up to 13 years;

  • Section 519, Prohibition on False Statements and Representations. Persons shall not make false statements in connection with the marketing or sale of a Multiple Employer Welfare Arrangements (MEWA).

Decisions to seek criminal action turn on a number of factors, including:

  • the egregiousness and magnitude of the violation;

  • the desirability and likelihood of incarceration both as a deterrent and as a punishment; and

  • whether the case involves a prior ERISA violator.

More information about EBSA enforcement activities is available here.

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