U.S. Labor Department publishes civil penalty rules under Pension Protection Act

Archived News Release — Caution: Information may be out of date.

Washington —The U.S. Department of Labor today announced a final regulation implementing the department’s authority to assess civil penalties against plan administrators who fail to give employees notice of the right to sell company stock in their pension plan accounts.

“The Pension Protection Act enacted President Bush’s proposal to guarantee workers the right to sell company stock in their 401(k)-type plans,” said Bradford P. Campbell, assistant secretary of the Labor Department’s Employee Benefits Security Administration. “The new right to diversify is an important step in improving retirement security. This rule enforces that right by penalizing plan officials who fail to give workers the required notice.”

The Pension Protection Act (PPA) established rights of plan participants and beneficiaries to sell the company stock in their accounts and reinvest the proceeds into other investments available under a plan. The PPA requires plan administrators to notify participants and beneficiaries of this new right and of the importance of diversifying the investment of retirement account assets. The PPA also gives the department authority to assess civil monetary penalties up to $100 per day against plan administrators for each violation of the new notice requirement.

This regulation will be published in the Federal Register on August 10. The public may submit comments to the department via e-mail sent to e-ORI@dol.gov or through the federal e-rulemaking portal at www.regulations.gov. Paper-based comments should be sent to the Office of Regulations and Interpretations, Employee Benefits Security Administration, Room N-5669, U.S. Department of Labor, 200 Constitution Avenue, NW, Washington, DC 20210, Attention: 502(c)(7) Civil Penalty.

U.S. Department of Labor news releases are accessible on the Department's Newsroom page. The information in this news release will be made available in alternate format upon request (large print, Braille, audio tape or disc) from the COAST office. Please specify which news release when placing your request at 202.693.7828 or TTY 202.693.7755. The U.S. Department of Labor is committed to providing America's employers and employees with easy access to understandable information on how to comply with its laws and regulations. For more information, please visit the Department's Compliance Assistance page.

Archived News Release — Caution: Information may be out of date.