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

• A. Up to 5% of incurred liabilities in the last report or $1,500
• B. Up to 10% of payroll
• C. A fixed $500
• D. Suspension of license

Answer: (A)

The penalty is a financial deterrent tied to a SIP’s reported financial obligations to ensure timely and complete reporting. It is calculated by applying up to 5% of the incurred liabilities shown in the most recent report, with $1,500 as a floor—meaning the larger of those two amounts would apply. This structure makes penalties meaningful for larger plans while protecting smaller ones from a tiny fine. Incurred liabilities include the reserves for losses and any claims already paid or outstanding, so the penalty grows with the plan’s financial exposure. It isn’t based on payroll, isn’t a flat $500, and doesn’t involve license suspension.