Non-Fiduciary's Liability for Penalties (Posted June 15, 2003) Technical Tip 30: The following question and answer are from the DOL Q&A Session at the 2000 ASPPA Annual Conference: As a TPA, sometimes our clients are "late" in depositing (k) deferrals and we discover the situation. Are we then "other persons" knowingly participating in a fiduciary breach? If so, the language is unreasonable.... Reference is to 502(l). DOL Response: No. 502(l) language requires the mandatory penalty to be assessed on a person who "knowingly participates in such breach or violation." Mere knowledge by a non-fiduciary of a breach should not trigger the 502(l) penalty. The mandatory penalty is passessed on any party who repaid the "recovery amount" pursuant to a settlement agreement. Caveat: The answer was drafted by the program moderators, including Fred Reish, based on their understandings of discussions with four senior officials of the Employee Benefits Security Administration (EBSA) of the U.S. Department of Labor. As a result, it does not represent a formal or binding position statement by the EBSA. View all Tips © 2012 Reish Luftman Reicher & Cohen, a Professional Corporation Important notice: Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner's situation. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of your situation.