Civil Penalties Under ERISA Section 502(c)(8)
EBSA plans to enhance retirement security by establishing rules for assessing civil monetary penalties against plan sponsors of multiemployer defined benefit pension plans who fail to take mandated corrective measures to improve the funded status of their plans, ultimately supporting the Secretary's good jobs for everyone policy.
Key Action: Final Regulation
The Department's EBSA plans to publish a final regulation in May 2010 that would implement the civil penalty provision under section 502(c)(8) of the Employee Retirement Income Security Act (ERISA). Under section 502(c)(8), the Secretary of Labor is granted authority to assess civil penalties not to exceed $1,100 per day against any plan sponsor of a multiemployer plan for certain violations of the funding rules of section 305 of ERISA for multiemployer plans in endangered or critical status.
Key Concern and Issues to be Addressed
The final regulation will establish necessary procedures for assessing and contesting civil penalties for certain violations of the funding rules for multiemployer plans in endangered or critical status.
Section 502(c)(8) of ERISA, added by section 202(b)(3) of the Pension Protection Act of 2006, provides that penalties may be assessed against a plan sponsor that fails to adopt, by the applicable deadline, a funding improvement plan for a plan in endangered status or a rehabilitation plan for a plan in critical status. Generally, the plan sponsor must adopt a funding improvement or rehabilitation plan no later than the 330th day of the plan year in which the plan's actuary certifies the plan to be in endangered or critical status. Penalties may also be assessed if a plan in endangered status (other than seriously endangered status) fails to meet the applicable benchmarks in its funding improvement plan by the end of the funding improvement period.
This civil penalty authority is effective for plan years beginning on or after January 1, 2008. The Department published a proposed regulation on September 4, 2009. Comments on the proposal are available at www.dol.gov/ebsa/regs/commentsmain.html.