Blackout Notice

[Guest mattman]

A plan sponsor recently sold one of its three divisions that were covered under their 401(k) plan. The plan did not terminate.

The new owners established a new 401(k) plan.

All participants who had balances in their prior plan are rolling their balances into the new plan.

Is a blackout notice required?

I can't seem to find anything in the SOX regs about spin-offs.

[RCK]

I'm confused by your terminology. Is this a spin off or a collection of rollovers?

RCK

[Guest mattman]

Sorry about that.

It's a spin-off.

[E as in ERISA]

Look at the merger rules. In your case, the spin-off is essentially a merger of a portion of a plan into another plan.

[R. Butler]

I don't see anything that would preemt the Notice requirement for a spinoff.

http://benefitslink.com/modperl/qa.cgi?db=...b=qa_401k&id=52

[E as in ERISA]

I think that you would send out a notice. But you could need to consider whether the special timing rules for mergers might apply. And you need to consider what needs to be the subject of the notice -- some restrictions may be permanent and not subject to notice (e.g., the investments in the old plan) and others might be temporary and subject to notice (e.g., the investments in the new plan).