What is the maximum civil penalty under Section 502 of ERISA for a fiduciary breach?

What is the maximum civil penalty under Section 502 of ERISA for a fiduciary breach?

• A. 5%
• B. 10%
• C. 20%
• D. 25%

Answer: (C)

The maximum civil penalty under Section 502 of the Employee Retirement Income Security Act (ERISA) for a fiduciary breach is indeed 20% of the amount involved in the breach. This penalty is designed to hold fiduciaries accountable for failing to adhere to their responsibilities in managing employee benefit plans. The rationale behind imposing such a substantial penalty is to deter misconduct and to ensure that fiduciaries act in the best interest of the plan participants and beneficiaries. In the context of ERISA, fiduciaries are entrusted with the responsibility of managing plan assets and must act prudently and loyally. When a fiduciary breaches these duties, the law seeks to impose consequences that reflect the severity of the breach and the potential harm to the plan's beneficiaries. A 20% penalty serves to provide a significant financial disincentive against breaching fiduciary duties while also ensuring that any losses caused by the breach can be addressed effectively.

The maximum civil penalty under Section 502 of the Employee Retirement Income Security Act (ERISA) for a fiduciary breach is indeed 20% of the amount involved in the breach. This penalty is designed to hold fiduciaries accountable for failing to adhere to their responsibilities in managing employee benefit plans. The rationale behind imposing such a substantial penalty is to deter misconduct and to ensure that fiduciaries act in the best interest of the plan participants and beneficiaries.

In the context of ERISA, fiduciaries are entrusted with the responsibility of managing plan assets and must act prudently and loyally. When a fiduciary breaches these duties, the law seeks to impose consequences that reflect the severity of the breach and the potential harm to the plan's beneficiaries. A 20% penalty serves to provide a significant financial disincentive against breaching fiduciary duties while also ensuring that any losses caused by the breach can be addressed effectively.