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Labor Department Significantly Increases Some Penalties for ERISA Violations

Under the Federal Civil Monetary Penalties Inflation Adjustment Act Improvements Act of 2015 (2015 Inflation Adjustment Act), the US Department of Labor (DOL) increased the penalties for specified violations of the Employee Income Retirement Security Act of 1974 (ERISA), published in an interim final rule (IFR). Most of the penalty increases involve reporting and disclosure failures related to benefit plans. After the 45-day comment period on the IFR lapses, the DOL will publish final regulations.

Penalty Adjustments for Inflation

The IFR adjusts ERISA reporting and disclosure penalties for inflation. The IFR’s adjustments apply only to penalties assessed after August 1, 2016, if the violation occurred after November 2, 2015. If the violation occurred on or before November 2, 2015, the current penalty amounts apply.

Annual Penalty Adjustments for Inflation

The 2015 Inflation Adjustment Act directs the DOL to adjust penalties annually for inflation. Beginning in 2017, DOL will adjust penalty amounts no later than January 15 of each year. By January 15, 2017, DOL will adjust penalty amounts to reflect any increase in inflation that occurred between October 2015 and October 2016. Future annual inflation adjustments are not subject to regulatory notice and rulemaking requirements. The DOL will post any changes to penalty amounts on its website.  

New Penalty Amounts as Adjusted For Inflation

A table of penalties, current and new, is included in the DOL Fact Sheet dated June 30, 2016, and is reproduced below. The table shows the current penalty amounts, and shows the inflation-adjusted penalty amounts that apply to penalties assessed after August 1, 2016 for violations occurring after November 2, 2015.

Penalties, Table

Next Steps

As a result of the upcoming increases in penalties for ERISA violations, plan sponsors should review their benefit plans for compliance with ERISA’s reporting and disclosure requirements. In some cases, DOL or IRS correction programs may be available to reduce these new penalties. 

© 2019 McDermott Will & Emery


About this Author

Diane M. Morgenthaler, Corporate Tax Planning Attorney, Retirement Plans for Companies, McDermott Will Emery, Chicago Law Firm

Diane M. Morgenthaler focuses her practice on employee benefits and executive compensation. She represents clients in matters before the US Internal Revenue Service, the Department of Labor and the Pension Benefit Guaranty Corporation.

Diane serves as employee benefit counsel to Fortune 500 corporations and other global corporations, and represents both public and private clients. She regularly designs and implements a variety of employee benefit plans and programs. Diane has extensive experience in employee benefit issues involved in...


Alan D. Nesburg is a partner in the law firm of McDermott Will & Emery LLP and is based in the Firm’s Chicago office.  He focuses his practice on a wide range of employee benefit matters, including qualified pension and profit-sharing plans, deferred compensation, and group benefits programs.  His clients include both public and private businesses.

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