[Code of Federal Regulations]
[Title 29, Volume 9]
[Revised as of July 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 29CFR2560.502c-2]

[Page 508-510]
 
                             TITLE 29--LABOR
 
CHAPTER XXV--PENSION AND WELFARE BENEFITS ADMINISTRATION, DEPARTMENT OF 
                                  LABOR
 
PART 2560--RULES AND REGULATIONS FOR ADMINISTRATION AND ENFORCEMENT--Table of Contents
 
Sec. 2560.502c-2  Civil penalties under section 502(c)(2).

    (a) In general. (1) Pursuant to the authority granted the Secretary 
under section 502(c)(2) of the Employee Retirement Income Security Act 
of 1974, as amended (the Act), the administrator (within the meaning of 
section 3(16)(A)) of an employee benefit plan (within the meaning of 
section 3(3) and Sec. 2510.3-1, et seq.) for which an annual report is 
required to be filed under section 101(b)(4) shall be liable for civil 
penalties assessed by the Secretary under section 502(c)(2) of the Act 
in each case in which there is a failure or refusal to file the annual 
report required to be filed under section 101(b)(4).
    (2) For purposes of this section, a failure or refusal to file the 
annual report required to be filed under section 101(b)(4) shall mean a 
failure or refusal to file, in whole or in part, that information 
described in section 103 and Sec. 2520.103-1, et seq., on behalf of the 
plan at the time and in the manner prescribed therefor.
    (b) Amount assessed. (1) The amount assessed under section 502(c)(2) 
shall be determined by the Department of Labor, taking into 
consideration the degree or willfulness of the failure to file the 
annual report. However, the amount assessed under section 502(c)(2) of 
the Act shall not exceed $1,000 a day, computed from the date of the 
administrator's failure or refusal to file the annual report and, except 
as provided in paragraph (b)(2) of this section, continuing up to the 
date on which an annual report satisfactory to the Secretary is filed.
    (2) If upon receipt of a notice of intent to assess a penalty (as 
described in

[[Page 509]]

paragraph (c) of this section) the administrator files a statement of 
reasonable cause for the failure to file, in accordance with paragraph 
(e) of this section, a penalty shall not be assessed for any day from 
the date the Department serves the administrator with a copy of such 
notice until the day after the Department serves notice on the 
administrator of its determination on reasonable cause and its intention 
to assess a penalty (as described in paragraph (g) of this section).
    (3) For purposes of this paragraph, the date on which the 
administrator failed or refused to file the annual report shall be the 
date on which the annual report was due (determined without regard to 
any extension for filing). An annual report which is rejected under 
section 104(a)(4) for a failure to provide material information shall be 
treated as a failure to file an annual report when a revised report 
satisfactory to the Department is not filed within 45 days of the date 
of the Department's notice of rejection.

A penalty shall not be assessed under section 502(c)(2) for any day 
earlier than the day after the date of an administrator's failure or 
refusal to file the annual report if a revised filing satisfactory to 
the Department is not submitted within 45 days of the date of the notice 
of rejection by the Department.
    (c) Notice of intent to assess a penalty. Prior to the assessment of 
any penalty under section 502(c)(2), the Department shall provide to the 
administrator of the plan a written notice indicating the Department's 
intent to assess a penalty under section 502(c)(2), the amount of such 
penalty, the period to which the penalty applies, and the reason(s) for 
the penalty.
    (d) Waiver of assessed penalty. The Department may waive all or part 
of the penalty to be assessed under section 502(c)(2) on a showing by 
the administrator that there was reasonable cause for the failure to 
file the annual report.
    (e) Showing of reasonable cause. Upon issuance by the Department of 
a notice of intent to assess a penalty, the administrator shall have 30 
days from the date of the service of notice, as described in paragraph 
(i) of this section, to file a statement of reasonable cause for the 
failure to file a complete annual report or why the penalty, as 
calculated, should not be assessed. A showing of reasonable cause must 
be made in the form of a written statement setting forth all the facts 
alleged as reasonable cause. The statement must contain a declaration by 
the administrator that the statement is made under the penalties of 
perjury.
    (f) Failure to file a statement of reasonable cause. Failure of an 
administrator to file a statement of reasonable cause within the 30 day 
period described in paragraph (e) of this section shall be deemed to 
constitute a waiver of the right to appear and contest the facts alleged 
in the notice, and such failure shall be deemed an admission of the 
facts alleged in the notice for purposes of any proceeding involving the 
assessment of a civil penalty under section 502(c)(2). Such notice shall 
then become a final order of the Secretary, within the meaning of 
Sec. 2570.61(g).
    (g) Notice of the determination on statement of reasonable cause. 
(1) The Department, following a review of all the facts alleged in 
support of a complete or partial waiver of the penalty, shall notify the 
administrator, in writing, of its intention to waive the penalty, in 
whole or in part, and/or assess a penalty. If it is the intention of the 
Department to assess a penalty, the notice shall indicate the amount of 
the penalty, not to exceed the amount described in paragraph (c) of this 
section.
    (2) Except as provided in paragraph (h) of this section, a notice 
issued pursuant to this paragraph indicating the Department's intention 
to assess a penalty shall become a final order, within the meaning of 
Sec. 2570.61(g), 30 days after the date of service of the notice.
    (h) Administrative hearing. A notice issued pursuant to paragraph 
(g) of this section will not become a final order, within the meaning of 
Sec. 2570.61(g), if, within 30 days from the date of service of the 
notice, an answer, as defined in Sec. 2570.61(c), is filed in accordance 
with Sec. 2570.62.
    (i) Service of notice. (1) Service of notice shall be made either:
    (i) By delivering a copy to the administrator or representative 
thereof;
    (ii) By leaving a copy at the principal office, place of business, 
or residence of

[[Page 510]]

the administrator or representative thereof; or
    (iii) By mailing a copy to the last known address of the 
administrator or representative thereof.
    (2) If service is accomplished by certified mail, service is 
complete upon mailing. If done by regular mail, service is complete upon 
receipt by the addressee.
    (j) Liability. (1) If more than one person is responsible as 
administrator for the failure to file the annual report, all such 
persons shall be jointly and severally liable with respect to such 
failure.
    (2) Any person against whom a civil penalty has been assessed under 
section 502(c)(2) pursuant to a final order, within the meaning of 
Sec. 2570.61(g), shall be personally liable for the payment of such 
penalty.
    (k) Cross-reference. See Secs. 2570.60 through 2570.71 of this 
chapter for procedural rules relating to administrative hearings under 
section 502(c)(2) of the Act.

[54 FR 26894, June 26, 1989]