Press Release
ASPA Responds to DoL Regulations for Blackout Period Notices
ARLINGTON, VA., November 20, 2002 -- In response to a request for feedback, ASPA (The American Society of Pension Actuaries) has released a seven-page response to the Department of Labor (DOL) final regulations relating to notice of blackout periods required by the Sarbanes-Oxley Act. In its response, ASPA recommended changes and/or clarification of the content and timing of blackout notices in order to assist employers in complying with the Sarbanes-Oxley Act. ASPA also recommended that the DOL amend the definition of one-participant plans, clarify the definition of a blackout period by distinguishing between permanent and temporary changes in options, loans, or distributions, and add some exceptions to the blackout definition.
According to the regulations, blackout periods apply only to a suspension of a participant’s rights “under the plan.” ASPA suggested that the phrase, “under the plan” include limitations on participant’s rights that are in the administrative policies and procedures, enrollment materials, and summary plan document. ASPA further requested that the DOL confirm that the blackout period rules apply to temporary and not permanent suspensions in participant rights, like a plan termination or a cessation of a loan program, for example.
ASPA opposes the required addition of the blackout period ending date to the notice. ASPA representatives are concerned that this requirement makes the process less flexible and increases the likelihood that secondary notices would be required. According to Brian H. Graff, Esq., ASPA Executive Director, “One potentially serious problem with the proposed regulations is the requirement that the notice specify the ending date of the blackout period. More than a month ahead of time is almost impossible to predict with certainty exactly when the blackout period will end. It would make more sense to provide a range of dates to participants indicating when the blackout period is likely to cease. Otherwise, the regulations will most certainly require many plan sponsors to send out expensive and administratively burdensome secondary notices merely because they were off by a single day.”
ASPA also asked for clarification of the definition of “one-participant plan.” This definition is ambiguous in the Act, and because it is best that the rules be consistent, ASPA requested that the DOL regulations incorporate its already existing rules in DOL Reg. §2510.3-3(b) relating to plans without “employees.”
Additionally, ASPA asked for confirmation that the last day on which participants’ rights are affected for purpose of calculating the 30-day and 60-day periods is the last day that trades, loans, or distributions can be effected, and not the last day on which participant requests would be received. ASPA also requested that the DOL clarify that 30-day and 60-day periods relate to the planned beginning date of the blackout period, and not the ultimate period after modifications were made.
ASPA noted several situations where exceptions should be made to the blackout definition. For example, there are situations in addition to QDROs that affect the rights of a single participant and should not be considered to be blackout periods, such as tax levies or conflicting beneficiary claims to death benefits that preclude payouts. ASPA also requested that the DOL consider that there should be no notice requirement for employees who enter the Plan after the initial blackout notice is provided and that notices sent to a missing participant’s last known address satisfy the notice rules.
In conclusion, ASPA requested clarification as to whether the removal or replacement of an investment option constituted a blackout period. In one view, this inability to invest in that particular option is a permanent change (and, therefore, not a blackout period). On the other hand, the removal or replacement of the option may be deemed to be a temporary limitation on the participant’s self-direction rights, which then terminates once the participant is allowed to elect among the new options. In that case, the blackout period rules would apply.
ASPA’s comments were developed by its Department of Labor Subcommittee, with assistance from the 401k Subcommittee, Government Affairs Committee co-chairs, and the Administration Relations Subcommittee chair. The Government Affairs section of ASPA’s Web site at www.aspa.org includes ASPA’s full response to the DOL Regulations and provides more detailed information about all of our legislative and regulatory activities. You can also contact ASPA’s government affairs department by calling (703) 516-9300 or by sending an e-mail to aspa@aspa.org.
ASPA is a national organization of retirement plan professionals dedicated to the preservation and enhancement of the private pension system in the United States. ASPA offers education and professional credentials for 401k administrators (QKA), actuaries (FSPA, MSPA), pension consultants (CPC), pension administrators (QPA), and other benefits professionals (APM). Its nearly 5,000 members provide consulting and administrative support to over half of the private retirement plans in the country.
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