Department of Labor’s Recent Increases to Federal Civil Penalties Affect Qualified Plans

On June 30, the U.S. Department of Labor (“DOL”) published final regulations mandating, among other things, increases in certain civil monetary penalties administered by the DOL to enforce Title I of ERISA. These increases will be effective for penalties assessed after August 1, 2016, if associated violations occurred after November 2, 2015. Penalty increases applicable to qualified plans include the following:

• Failure to furnish reports (g.,pension benefit statements) to certain former participants and beneficiaries or to maintain required plan records: The current penalty will increase from $11.00 per participant to $28.00 per participant.
• Failure or refusal to file a Form 5500 series return: The current penalty of up to $1,100.00 per day for each return will increase to up to $2,063.00 per day for each return.
• Failure to furnish information requested by the Secretary of Labor under ERISA Section 104(a)(6), such as a Summary Plan Description: The current penalty of up to $110.00 per day (but not greater than $1,100.00 per request) will increase to up to $147.00 per day (not to exceed $1,472.00 per request).
• Failure to furnish a required blackout notice: The current penalty of up to $100.00 per day for each failure will increase to up to $131.00 per day for each failure.
• Failure to furnish an automatic contribution arrangement notice: The current penalty of up to $1,000.00 per day for each failure will increase to up to $1,632.00 per day for each failure.

This guidance also states that future penalty adjustments will be made by January 15 of each year, beginning in 2017.

The final regulations can be viewed here:  https://www.federalregister.gov/articles/2016/07/01/2016-15378/department-of-labor-federal-civil-penalties-inflation-adjustment-act-catch-up-adjustments