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

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

• A. An amount up to 3% of the incurred liability in the last report or $1000, whichever is less.
• B. An amount up to 5% of the incurred liability in the last report or $1500, whichever is less.
• C. An amount up to 7% of the incurred liability in the last report or $2000, whichever is less.
• D. An amount up to 10% of the incurred liability in the last report or $2500, whichever is less.

Answer: (B)

The penalty is tied to the incurred liability shown in the most recent annual report, with a cap to keep the penalty reasonable. Specifically, the penalty is the lesser of 5% of the incurred liability in the last report or $1,500. This means it deters late or incomplete filings but prevents an excessive charge for larger plans. For example, if the last report shows $20,000 in incurred liability, 5% is $1,000, so the penalty is $1,000. If the last report shows $100,000, 5% is $5,000, but the cap brings the penalty down to $1,500. Thus the correct choice reflects the 5% rate with a $1,500 maximum, whichever is less. The other options would not match this specific penalty structure.

The penalty is tied to the incurred liability shown in the most recent annual report, with a cap to keep the penalty reasonable. Specifically, the penalty is the lesser of 5% of the incurred liability in the last report or $1,500. This means it deters late or incomplete filings but prevents an excessive charge for larger plans.

For example, if the last report shows $20,000 in incurred liability, 5% is $1,000, so the penalty is $1,000. If the last report shows $100,000, 5% is $5,000, but the cap brings the penalty down to $1,500.

Thus the correct choice reflects the 5% rate with a $1,500 maximum, whichever is less. The other options would not match this specific penalty structure.