What is the penalty for failure to file a complete or timely annual report?

• A. An amount up to 5% of the incurred liabiliites in the last report or $1,500
• B. An amount up to 10% of the incurred liabiliites in the last report or $3,000
• C. An amount up to 5% of the incurred liabiliites in the last report or $3,000
• D. An amount up to 10% of the incurred liabiliites in the last report or $1,500

Answer: (A)

The penalty is tied to the size of the plan’s incurred liabilities from the last report, with a fixed dollar cap. Specifically, you take 5% of the incurred liabilities in the most recent report, but the amount cannot exceed $1,500. In other words, the penalty is the lesser of 5% of the last report’s incurred liabilities or $1,500. This structure keeps penalties proportionate for larger plans while preventing excessive fines for smaller ones. The other options use a 10% rate or a $3,000 cap, which do not align with this statutory rule.