Plan Document Requests – Failure to Comply Can Cost Big $

March 27th, 2008

Plan document requests seem like a simple matter.  A participant requests a copy of a plan document from the plan sponsor and the plan sponsor provides it, right?  Not always.

Recently, a federal judge awarded a penalty of $50 per day to a pension plan participant because she was not given the plan document she requested.  Additionally, the ex-wife of the plan trustee was the person against whom the penalty was awarded.

ERISA provides a maximum penalty of $110 per day for each day the requested document is not provided.  Plan administrators generally have 30 days from the date of the request to get the document to the requestor. 

Additionally, courts have found that the burden of complying with the request is on the plan administrator.  For instance, even where the participant does not specifically request the plan document, the plan administrator is responsible for providing it when the information that the participant has requested would be found in the document.

In the recent case, the ex-wife of a pension participant asked for the plan documents in mid-1996 after she was awarded $50,000 from her ex-husband’s pension plan in their divorce.  The plan failed to comply with the request and never send the actual plan document. 

U.S. District Judge Oliver W. Wanger of the U.S. District Court for the Eastern District of California rejected the plaintiff’s claim for the $110 per day penalty stating that some documents had been provided.  However, because the plan document had not been provided, he awarded her a $50 per day penalty from June 6, 1996, to September 25, 2005 – a total of $160,310.

This case is just a reminder for employers to ensure that their plan administrators comply with requests for plan documents from participants within the 30 days specified under ERISA.  Additionally, if plan documents are not up-to-date, employers should work with their benefits counsel to get the documents in compliance with current law so they will be ready to respond to requests.  As shown by this recent case, failure to comply can be very costly for employers.

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