New Regulatory Requirements Up the Stakes for 401(k) and Benefit Plan Compliance

FEBRUARY 6, 2024

With new and increasing regulations like the Consolidated Appropriations Act (CAA), 2021, and the Setting Every Community Up for Retirement Enhancement (SECURE) Act 2.0 affecting employer-sponsored health and retirement plans, smaller businesses may find it difficult to offer a complete benefits package while remaining in compliance with the various regulations applicable to their benefit plans.

What Is the Cost of Noncompliance?

For smaller businesses, there is a lot that can be overlooked. Below are just a few examples of the federal regulatory requirements affecting employer health and welfare benefits and retirement plans, and the financial impact of noncompliance.

ERISA: Plans subject to the Employee Retirement Income Security Act (ERISA), including 401(k) retirement plans, must provide a summary plan description to participants and beneficiaries that explains the plan and the participant’s rights and responsibilities. Failing to do so can result in a penalty of up to $110 per day per affected individual.

COBRA: Employers with 20 or more employees are required to provide COBRA notices to health plan participants. Failing to provide certain COBRA notices also carries a penalty of $110 per day per affected individual. Many smaller employers struggle to manage the complexities of COBRA requirements.

Special Healthcare Notices: Employers are also required to provide a variety of notices to plan participants. Many of these notices carry a penalty of $100 or more per day per individual for noncompliance.

In addition to federal requirements, some states have regulatory requirements, such as state COBRA and leave laws, and health insurance mandates. Read more about the compliance tools and resources USI Insurance Services can provide to help small businesses meet regulatory requirements.