Section 502(l) of the Employee Retirement Income Security Act of
1974 (ERISA or the Act) requires the Secretary of Labor to assess a
civil penalty against a fiduciary who breaches a fiduciary
responsibility under, or commits any other violation of, part 4 of title
I of ERISA or any other person who knowingly participates in such breach
or violation. The penalty under section 502(l) is equal to 20 percent of
the ``applicable recovery amount'' paid pursuant to any settlement
agreement with the Secretary or ordered by a court to be paid in a
judicial proceeding instituted by the Secretary under section 502 (a)(2)
or (a)(5). The Secretary may, in the Secretary's sole discretion, waive
or reduce the penalty if the Secretary determines in writing that:
(a) The fiduciary or other person acted reasonably and in good
faith, or
(b) It is reasonable to expect that the fiduciary or other person
will not be able to restore all losses to the plan or any participant or
beneficiary of such plan without severe financial hardship unless such
waiver or reduction is granted.
The penalty imposed on a fiduciary or other person with respect to any
transaction shall be reduced by the amount of any penalty or tax imposed
on such fiduciary or other person with respect to such transaction under
section 502(i) or section 4975 of the Internal Revenue Code of 1986 (the
Code).
