In order to compensate for the increase in financial inflation, the United States Department of Labor (DOL) increased penalties regarding specific violations of the Employee Income Retirement Security Act of 1974 (ERISA).
These penalties were developed under the Federal Civil Monetary Penalties Inflation Adjustment Act Improvements Act of 2015 (2015 Inflation Adjustment Act). The adjustments were published as an interim final rule (IFR).
Most penalty increases address how benefit plans are disclosed and reported. After a standard 45 day period for comments, the IFR will lapse, at which point the regulations will be published as final.
How Penalties Will be Adjusted for Inflation
The penalties that apply to ERISA reporting and disclosure are adjusted by the IFR periodically to account for inflation. In this case, the IFR’s new adjustments will only apply to penalties assessed after August 1, 2016, if the violation in question occurred after November 2, 2015. If the violation occurred on or prior to this date in November, current penalty rates still apply.
How Inflation Will be Adjusted Annually
The DOL is directed to adjust penalties for inflation by the 2015 Inflation Adjustment Act. Beginning in 2017, penalty amounts will be adjusted each year by the DOL no later than January 15. As of January 15, 2017 DOL will adjust penalty amounts to reflect any inflationary increase that occurred between October 2015 and October 2016.
In the future, annual inflation adjustments will not be subject to rule making requirements. Any penalty changes by the DOL will be posted on its website.
Where to Find Current Penalty Amounts
Current penalty amounts can be found on the DOL website, in a table published June 30, 2016. In addition to the current amounts, the table shows the new, inflation-adjusted penalty amounts that will apply to the violations that occurred after November 2, 2015 but were assessed before August 1, 2016.