January 13, 2009

DOL Issues Final Civil Penalty Rules

EBSA has issued final regulations relating to procedures for assessing civil monetary penalties, in accordance with ERISA Section 502(c)(4), for certain notice failures.  In summary, the Pension Protection Act of 2006, imposes several new notice requirements on qualified plan officials.  The recently issued regulations clarify the process that the DOL can use to assess civil penalties for these violations. 

Generally, a $1,000 per day penalty can be assessed, but the regulations do allow plan administrators request leniency for unintentional violations.  Of particular note, notice failures for which civil penalties can be assessed, relate to:

  1. Automatic contribution arrangement notice obligations applicable to defined contribution plans that include such provisions;
  2. Defined benefit plan notice of limits on benefit accruals; and
  3. Certain multi-employer plan obligations, relating to contributions and potential withdrawal liabilities.

One very important point made in these regulations is that payment of a civil penalty is a personal responsibility of the party(ies) against whom the penalty is assessed; it is not a permissible plan expense.


The information contained in this Benefit Beat is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations.

As required by U.S. Treasury rules, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained in this Benefit Beat is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service.

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