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COLLECTED WISDOM™ on 401k Plan Blackout Periods

The issue of "blackout" (often called lockdown or transition) periods has become an important issue. We have started this collection of articles on this issue to help you understand and work throught the subject, but there is not much new being published on this issue.

This archive contains not only the most current material on the topic, but also older items that are still relevant, provide background, perspective or are germane to the topic.

If you find a broken link or an items that you feel is outdate, irrelevant or no longer appropriate, please let us know.

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Blackout Period and Notice

Abstract: Forms 5500, Annual Returns/Reports of Employee Benefit Plan and Forms 5500-SF have a two-part question about plan compliance with the blackout notice rules. The first part asks if an individual account plan had a blackout period. If the answer is yes, the follow-up question asks whether a blackout notice was provided or if one of the exceptions applied. The IRS is monitoring compliance with blackout period and notice rules. This is a review.

Source: Kravitzinc.com, June 2015

Lights Out for a 401k Investment Fund? Don't Forget the Blackout Notice Rules

Abstract: Replacement of an investment option or a permanent restriction on new contributions to an investment fund does not, in and of itself, trigger a blackout notice requirement. However, if pursuant to such actions the rights to diversify investments or take loans or distributions are suspended, a blackout notice may be in order. The penalties for noncompliance can be steep. Employers who are changing 401k investment funds are urged to carefully consider whether a blackout notice is required.

Source: Mintz.com, October 2014

Updated Overview on Blackout Notices

Abstract: A blackout period is defined as a period of more than three-business days during which a participant has been "temporarily suspended, limited or restricted" from any one of the three reasons. Here is an overview of the rule.

Source: Mhco.com, April 2014

401k Blackout Period Definition

Abstract: A blackout period is an amount of time during which a 401k plan goes dark or is turned off for all practical purposes. You can't adjust your investment options or percentages, request loans or distributions, make trades or do much of anything else. Your employer will continue taking contributions out of your paycheck, however. Blackouts can last days, weeks or even months. There's no legal maximum length, although employers must tell you when a significant blackout is coming.

Source: Zacks.com, August 2013

Sample Blackout Notice

Abstract: A sample blackout notice for certain individual account defined contribution plans that provides notice of blackout periods to participants and beneficiaries whose rights under the plan will be temporarily suspended, or limited or restricted by a blackout period. This Standard Document has integrated notes with important explanations and drafting tips.

Source: Practicallaw.com, June 2013

Sarbanes-Oxley Produces Complex Blackout Notice Requirements and Imposes Personal Civil Liability for Plan Administrators

Abstract: This article reviews the ?nal blackout notice rules, the notice content requirements, the exceptions to the notice requirement, and the civil penalties for noncompliance and provides some recommended strategies for administrators facing the potential imposition of civil penalties. In addition, the article provides practical considerations for all plan administrators to consider before facing a blackout period.

Source: Hickmonperrin.com, April 2013

Sample Blackout Notice

Abstract: This is a sample blackout notice for a 401k plan.

Source: Financialadvisordirect.com, November 2012

All About Blackout Periods

Abstract: A blackout period is basically a time that participants temporarily lose control of their retirement accounts. Plan sponsors/administrators are required to provide written notice of blackout periods to plan participants.

Source: 401kfiduciarynews.com, November 2011

What is a "Blackout Period"?

Abstract: A blackout period results in a suspension of participant.s rights to make changes to their account, including features such as but not limited to: changing investment allocations, changing deferral percentages, requesting loans or distributions.

Source: WithumSmith+Brown, January 2011

Blackout Notice Suit Allowed to Move Forward

Abstract: A federal judge in Ohio ruled that a 401k profit-sharing plan and two participants can press forward with their lawsuit alleging that Principal Life Insurance Co. breached its duty to make a timely notice of a plan blackout period.

Source: Plansponsor.com, July 2010

DOL Releases Blackout Notice Guidelines

Abstract: The U.S. Department of Labor (DOL) has released requirements for blackout notices to 401k plan participants as required by the Sarbanes-Oxley Act enacted earlier this year. The guidance addresses the required contents and timing, includes a model participant notice and is effective for blackout periods beginning on or after January 26, 2003. Located on: Watson Wyatt Worldwide

DOL Releases Final Rules for Blackout Period Notices

Abstract: This document contains the final rule under ERISA, which was enacted into law on July 30, 2002 as part of the Sarbanes-Oxley Act of 2002, provides that written notice is to be provided to affected participants and beneficiaries of individual account plans of any ''blackout period'' during which their right to direct or diversify investments, obtain a loan or obtain a distribution under the plan may be temporarily suspended. The final rules provide guidance to plan sponsors, administrators, participants and beneficiaries regarding the requirements for furnishing notices of blackout periods in individual account pension plans.

Source: U.S. Department of Labor, January 2003

Public Comments on Blackout Notice and Civil Monetary Penalty Regulations

Abstract: Labor Department Issues Rules on Disclosure of Pension Plan "Blackout Periods." They have published the public comments to these rules at this link. Located on: U.S. Department of Labor


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