Department of Labor to Get Cost-of-Living Increase

The Department of Labor recently published an interim final rule to adjust for inflation the civil monetary penalties enforceable by the department. The penalty amounts are being adjusted for inflation in order to comply with the Federal Civil Monetary Penalties Inflation Adjustment Act Improvements Act of 2015 (2015 Inflation Adjustment Act).

Some noteworthy increases that will be effective after August 1, 2016 include;

• The penalty for failure to timely file a Form 5500 will increase from $1,100/day to $2,063/day,
• Failure to furnish an automatic contribution arrangement notice will rise from $1,000/day to $1,632/day,
• Failure to notify participants of certain funding related benefit restrictions and/or limitations under Code Section 436 will also rise from $1,000/day to $1,632/day,
• Failure to provide a blackout notice will carry a penalty of $131/day – up from $100/day.

Re-Adjusting for Inflation

The 2015 Inflation Act requires federal agencies to adjust their civil penalty amounts annually, using a defined formula. Therefore, the Department of Labor will again be announcing adjusted penalties no later than January 15, 2017 to reflect any increase in inflation from October 2015 – October 2016.

For a complete list of penalty amounts enforceable by the Employee Benefit Security Administration, click here. FAQs on the 2015 Inflation Adjustment Act can be found here.