Blackout Notice Required?

[Guest bgiles]

We have a plan that is a pooled account and is valued quarterly. We are switching recordkeepers and going to a daily valued account where each participant will have their own account. Currently, a participant has to wait until the first day of the following quarter in order to exchange investments, obtain a loan or a distribution. If the transfer of recordkeepers will begin and end in the first quarter where participants did not have the right to exchange funds or obtain a loan/distribution under the terms of the plan does the blackout notice need to be provided? I would not think so because the change of recordkeepers in this case does not appear to suspend a participants rights under the plan during this change. Any thoughts are welcomed.

[Brian Gallagher]

There is a link to the final regs "...Relating to Notice of Blackout Periods to Participants and Beneficiaries..." on the dol website.

it seems to say that exclusions to the blackout period may be: regularly scheduled blackouts, QDRO's, suspension of ability to make transaction do to the actions of the participant.

Since the people would normally have been able to "direct or diversify" their assets, I would think this is a "blackout" situation under Sarbanes-Oxley.

Plus, conservative is usually the way to go in situations like this. Would it be very hard to provide the notice?

[MWeddell]

Before concluding that it is a regularly-scheduled blackout period, read the definition in the regulation carefully and review the SPD and other existing communications to make sure that the quarterly blackout periods are clearly communicated.

I also agree with the above post: given the potential financial penalties, be cautious and distribute the notice if you're at all unsure.

[four01kman]

My quick reading of the final blackout rules confirms the above posts: you have a blackout and should comply.