[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: 29CFR2570.81]

[Page 545-546]
 
                             TITLE 29--LABOR
 
CHAPTER XXV--PENSION AND WELFARE BENEFITS ADMINISTRATION, DEPARTMENT OF 
                                  LABOR
 
PART 2570--PROCEDURAL REGULATIONS UNDER THE EMPLOYEE RETIREMENT INCOME SECURITY ACT--Table of Contents
 
 Subpart D--Procedure for the Assessment of Civil Penalties Under ERISA 
                             Section 502(l)
 
Sec. 2570.81  In general.

    Section 502(l) of the Employee Retirement Income Security Act of 
1974 (ERISA or the Act) requires the Secretary of Labor to assess a 
civil penalty against a fiduciary who breaches a fiduciary 
responsibility under, or commits any other violation of, part 4 of title 
I of ERISA or any other person who knowingly participates in such breach 
or violation. The penalty under section 502(l) is equal to 20 percent of 
the ``applicable recovery amount'' paid pursuant to any settlement 
agreement with the Secretary or ordered by a court to be paid in a 
judicial proceeding instituted by the Secretary

[[Page 546]]

under section 502 (a)(2) or (a)(5). The Secretary may, in the 
Secretary's sole discretion, waive or reduce the penalty if the 
Secretary determines in writing that:
    (a) The fiduciary or other person acted reasonably and in good 
faith, or
    (b) It is reasonable to expect that the fiduciary or other person 
will not be able to restore all losses to the plan or any participant or 
beneficiary of such plan without severe financial hardship unless such 
waiver or reduction is granted.

The penalty imposed on a fiduciary or other person with respect to any 
transaction shall be reduced by the amount of any penalty or tax imposed 
on such fiduciary or other person with respect to such transaction under 
section 502(i) or section 4975 of the Internal Revenue Code of 1986 (the 
Code).