Blackout period

[Rai401k]

I am a participant in a 401(K) Plan my current provider is halting all trading and transfers for five business days at the end of each quarter. Neither I, nor any other Plan participant has recieved any written notice or e-mail. Does this constitute a Blackout and do I have any recourse. I am really concerned especially in these market conditions.

[MGB]

Technically, it is a blackout. However, that only means that you must receive notification that it will occur. Blackouts are not prohibited, they only need to meet notification requirements.

If this is a regularly scheduled event, and it is communicated through an SPD or other form of notification, then they do not need to renotify you that it will occur each quarter.

You state that you have been not been notified. But, how did you know this?

This type of blackout is often there if the plan contains your employer's stock. The reason for it is that many people within the organization have insider information at the end of the quarter just before the earnings announcement is made public. By having a blackout, it precludes those insiders from buying or selling their stock in the plan just before a large movement in the stock price due to a quarterly announcement.

[E as in ERISA]

If it is regularly scheduled and communicated to you in plan materials, then technically it is probably excluded from the definition of "blackout period."

[Rai401k]

The way we find out is when you log in to my account via the internet, there is a message on the login page. There is no Employer stock in our 401(k) Plan, and we have been told that the provider halts trading to collect their fees. And no it is not in any SPD or any other document we were provided.

[QDROphile]

If you are worried about a regular monthly 5 day suspension of your trading, you should look for education or advice about investing for retirement.

[Kirk Maldonado]

JoeDuka:

Does your plan allow investments in employer securities? The recently enacted blackout period rules only apply if the plan allows employees to sell employer stock that is acquired under the plan.

[E as in ERISA]

The DOL blackout notice rules apply to suspensions of investment direction, loans or distributions, regardless of whether employer stock is or isn't involved. The SEC blackout trading restrictions only apply to SEC companies with employer stock in the plan.

[Rai401k]

Thank you for your help, but I am a little confused, no were in my very limited reading did I see that blackout preiods are limited to Plan with Employer Stocks

[E as in ERISA]

The notice regarding regularly scheduled suspensions can be in any of the following forms:

> the summary plan description,

> a summary of material modifications,

> materials describing specific investment alternatives under the plan and limits thereon or any changes thereto,

> participation or enrollment forms, or

> any other documents and instruments pursuant to which the plan is established or operated that have been furnished to such participants and beneficiaries.

These are not all required to be on paper. So the electronic notice may be sufficient for regularly scheduled suspensions.

You obviously have actual notice that the suspension is occurring. If what you are really concerned about is the suspension itself (and not the notice), maybe you need to encourage your employer to change to a different service provider that doesn't do quarterly suspensions to collect its fees.

[E as in ERISA]

Joe -- I believe that Kirk accidentally confused the ERISA blackout notice rules with the SEC blackout trading restrictions.

[Kirk Maldonado]

I did make that mistake.