At the end of each fiscal year, the US Department of Labor’s (DOL’s) Employee Benefits Security Administration (EBSA) compiles the monetary results it obtained through various initiatives meant to ensure compliance with the Employee Retirement Income Security Act (ERISA).
These initiatives include investigations (the DOL has expansive authority to investigate employee benefit plans as well as the individuals and entities that service such plans), application-based voluntary compliance programs, and informal complaint resolution.
According to the recently released 2021 Enforcement Statistics Fact Sheet, the DOL recovered more than $2.4 billion on behalf of ERISA-governed plans, participants, and beneficiaries from the following sources in fiscal year 2021:
The vast majority of the DOL’s 2021 monetary recovery—totaling $1.9 billion—came from enforcement actions, with retirement plan enforcement actions related to the Terminated Vested Participant Project responsible for $1.548 billion of that total. When the DOL discovers an ERISA violation during a plan or service provider investigation, its enforcement actions can include civil penalties, civil litigation, and/or referrals to federal and state authorities for criminal prosecution.
In FY 2021, the DOL closed 1,072 investigations and referred 70 cases for civil litigation. In the criminal arena, the DOL closed 208 cases (38 with convictions or guilty pleas) and obtained indictments against 72 individuals.
By dedicating some of its 2021 resources specifically to the “global correction” of violations at the service provider level, the 2021 Enforcement Statistics Fact Sheet explains that the DOL corrected violations involving common plan terms or administrative practices that affected multiple retirement plans, health plans, or other welfare plans (such as plans providing life or disability insurance).
Voluntary Fiduciary Correction Program
The DOL received 1,201 applications for its Voluntary Fiduciary Correction Program (VFCP) in 2021, which resulted in $34 million in restorative payments to plans. VFCP provides a formal mechanism for fixing certain ERISA breaches and receiving the DOL’s sign-off on the correction prior to an investigation.
Abandoned Plan Program
The DOL approved 923 termination applications through the Abandoned Plan Program, which resulted in 2021 distributions to participants totaling $50.8 million. The Abandoned Plan Program facilitates terminations and distributions of individual account plans (e.g., 401(k) plans) that have been abandoned.
The DOL generally considers a plan abandoned if no contributions to or distributions from the plan are made for at least 12 consecutive months and—following reasonable efforts to locate the plan sponsor—the DOL determines the sponsor no longer exists, cannot be located, or is otherwise unable to maintain the plan.
Informal Complaint Resolution
The DOL closed more than 175,000 inquiries and recovered $499.5 million in benefits through informal resolution of individual complaints in 2021. Individuals may directly contact the DOL for assistance resolving complaints related to employee benefit plans. These inquiries often lead to informal resolution but can also result in investigations and other enforcement actions.
These numbers raise a few notable points and insights about the DOL’s ERISA enforcement and investigatory efforts.
- Though the DOL’s 2021 recovery figure is slightly lower than the $3.1 billion recovered in FY 2020, it is in line with its five-year average of $2.2 billion. These high numbers over the past five years reflect that DOL enforcement activities and investigations remain a high priority for the agency, and ERISA plan fiduciaries and service providers can expect the DOL to continue its robust investigation and enforcement program. This affirms that the DOL is an extremely active and evolving enforcement agency, as we emphasized in our 2021 posts on cybersecurity investigations, mental health parity investigations, uncashed check initiatives, and growing interest in cryptocurrency investments.
- The Terminated Vested Participant Project (or missing participant investigations) continues to be a key focus of the DOL and a key driver of these recovery numbers. As a result, we expect this will continue to be an area of DOL investigatory focus.
- In reporting this year’s statistics, the DOL emphasizes its growing service provider level investigation activity (also known as “book of business audits”). The DOL’s prior year statistic reports have not included this callout. This is consistent with other DOL statements and actions that suggest an increasing focus and emphasis on investigations of service providers.
- The 2021 Enforcement Statistics Fact Sheet also—for the first time—includes specific information related to health and welfare plan enforcement actions. This is consistent with our past observations that the DOL is increasingly focused on investigations of health and welfare plans, especially around mental health parity act compliance.