Not really a decay, exactly. If your forum account is penalized, you’re restricted to TL0 for six months. At the end of the six months, the restriction is lifted and you achieve whichever trust level you qualify for at that time. That means it’s possible to maintain the requirements for TL3 and jump from TL0 to TL3 immediately.
The in-game penalty record I believe has only ever been reset whenever they’ve altered the penalty structure. Previous iterations may have had a decay, I don’t really remember. My in-game infractions can be counted on one hand with fingers to spare.