The failure to disclose would be considered a breach of fiduciary duty.  The DOL does not have any penalties that apply for failure to comply.  However, the breach could be used as evidence in a legal action brought by the DOL or a participant.  This could result in monetary damages for losses that would have been avoided had the participant received the appropriate disclosures.

In addition, if a plan intends to also comply with ERISA 404(c), the failure to comply with ERISA 404(a)(5) will result in a failure to comply with ERISA 404(c).

This article was last updated on August 7, 2012