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Department of Labor Increases Civil Penalties of Employee Benefit Plan Violations

On July 1, 2016, the Department of Labor (DOL) issued regulations that increased the civil monetary penalties of many employee benefit related violations. The interim rule is the result of a 2015 amendment to the Federal Civil Monetary Penalties Inflation Adjustment Act of 1990; the amendment requires federal agencies to continue to adjust civil penalties for inflation on an annual basis.

These increases are applicable to penalties assessed after August 1, 2016 for violations that occurred after November 2, 2015.

Some of the penalties increases that will impact 401(k) plans include:

  • Failure to file Form 5500 is increased from the current penalty of $1,100 per day to a new maximum of $2,063 per day.
  • Failure to provide notice to participants of a 401(k) plan with an automatic contribution arrangement is increased from a maximum of $1,000 per day to a maximum of $1,632 per day.
  • Failure to furnish a blackout notice or a notice of the right to divest employer securities is increased from $100 per day to $131 per day.

Beginning in 2017, the DOL will adjust the new penalty amounts annually for inflation no later than January 15 of each year. Annual inflation amounts are not subject to notice and rulemaking. A fact sheet listing all of the changes is available on the DOL website: