ERISA Penalty Increases Hit NY Employers This January

If you thought 2024's employee benefits compliance was tough, 2025 just raised the stakes. The Department of Labor quietly increased ERISA penalties this month, and according to recent industry analysis, plan sponsors face higher penalties and increased scrutiny. For New York employers juggling federal and state requirements, this means your compliance game needs to be tighter than ever.

What Changed

Effective January 15, 2025, the DOL increased ERISA plan penalties across the board. The big one that hits most of my clients: failing to file your annual Form 5500 now costs $2,739 per day, up from last year's rate. That's not a one-time fee - it accumulates daily until you file. Miss your deadline by a month? You're looking at over $82,000 in penalties.

The changes also affect automatic enrollment requirements for new 401(k) and 403(b) plans. Starting January 1, 2025, employers must automatically enroll eligible employees with initial deferral percentages between 3% and 10% of compensation. Plus, FSA contribution limits increased to $3,300 for 2025 plan years, and there's good news for HSA participants - High-Deductible Health Plans can now offer pre-deductible telehealth coverage without affecting HSA eligibility.

Who This Affects

Every New York employer sponsoring a qualified retirement plan, health plan, or other ERISA-covered benefit is in scope. Whether you're a 15-person marketing agency in Brooklyn or a 200-employee manufacturer in Rochester, these penalties apply equally. Small businesses often get hit hardest because they lack dedicated HR teams to track deadlines and manage compliance.

The automatic enrollment rules specifically impact employers establishing new 401(k) or 403(b) plans after January 1, 2025. If you're considering adding a retirement plan this year, factor these requirements into your decision.

What You Need to Do

• Review your Form 5500 filing deadlines immediately - mark them in your calendar with 30-day advance warnings
• If you're launching a new retirement plan in 2025, build automatic enrollment (3-10% deferral rate) into your plan design
• Update your FSA plan documents to reflect the new $3,300 contribution limit
• Benchmark your plan fees and services annually to demonstrate fiduciary responsibility
• Document all fiduciary decisions and maintain records of your compliance efforts

The NY Angle

New York employers face a perfect storm of compliance complexity. You're already managing state-specific requirements like Paid Family Leave and Disability Benefits Law reporting. Now federal penalties are higher, and ACA reporting changes we covered earlier add another layer of administrative burden.

The key is integration. Your benefits administration system needs to handle federal Form 5500s, ACA reporting, and New York's PFL/DBL requirements seamlessly. Many of my clients discovered their current systems couldn't handle the workload when penalties started hitting their budgets. Don't wait until you're facing a $2,739-per-day problem to upgrade your compliance infrastructure.

Need help navigating this? Benton Oakfield's compliance team works with businesses like yours every day. We can review your current setup and make sure you're covered. Reach out - it's what we do.

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