Blackout Notice not delivered timely

[Guest Twinky]

As the TPA, we provided the blackout notice well in advance of the 30 day minimum requirement. However, there was confusion as to who was responsible for delivering the notices. One thought the other was doing it and vise versa. Well needless to say, it didn't get delivered to the participants. The blackout is to take place (starting) in a week and run for a week. What are our options to make this right? I assume if it's possible, to push the blackout back, but I don't think that will be possible. Has anyone had this happen? (It's a first for us.)

Any help would be greatly appreciated.

Thanks.

[Guest Sieve]

You should look at the regs, specifically DOL Reg. Sections 2520.101-3(b)(1)(v) and -3(b)(2).

Obvioulsy, Notice can be given less than 30 days in advance, since -3(b)(1)(v) indicates what must be included in the Notice "n any case in which the notice . . . is not furnished at least 30 days in advance . . .". This additional information includes a "statement that Federal law requires the notice be furnished . . . at least 30 days in advance . . . and . . . [a]n explanation of the reasons why at least 30 days advance notice could not be furnished".

-3(b)(2)(ii) then provides an exception to the Notice period if there is a determination--dated and signed by the fiduciary--that the "inability to provide the advance notice . . . is due to events that were unforseeable or circumstacnes beyond the control of the plan administrator . . ." (DOL Reg. Section 2520.101-3(b)(2)(ii)(B).) I assume, in this particular case, that the administrative mix-up was "unforseeable"--albeit that explaining that fact to participants will be embarrassing. But, if that is the written determination of the fiduciary, and if Notice is then given "as soon as administratively possible under the circumstances" (DOL Reg. Section 2520.101-3(b)(2)(iii)), then the 30-day notice period does not apply. But, when the Notice is eventually given, don't forget to include the info described earlier from -3(b)(1)(v)).

To my mind, it would be better to push the date out somehow so that the full 30-day notice period can pass, but that's the fiduciary's decision.

[Guest Twinky]

Thanks Sieve! I always value your opinion.

Yes, my first position is to try and push the date back. But in the event that the administrator/employer doesn't want to do that, I was wanting a backup option.

My understanding of what was unforseeable was very limited (i.e., bankruptcy, merger, etc.), but if pushing back the date doesn't work, I guess we can try that and hope it flies. (I'd hate to see the employer have to pay such steep penalties.)

Thanks again.

[Guest Sieve]

Twinky --

You're right that the civil penalty certainly is severe under ERISA Sectin 502©(4), and I don't know if giving less than 30 days notice due to this kind of unforseeable circumstance would prevent assessment of the penalty if the DOL brought suit (or prevent the DOL from bringing suit in the first place). I suspect so, if it is caught soon enough and the substitute Notice is given quickly and no one is really hurt (whatever that means!). But I can't--and you can't--be sure, and that's why moving the date is a much better alternative.

If this is a voluntary change--such as converting to a different TPA--and is not being driven by the corporate transactions you mention, I would guess that the DOL would be a bit less understanding of giving less than the full 30 days. And an extension of the conversion date would make sense in that situation to prevent the uncertainty.

[Guest Twinky]

Thanks Sieve!

We were able to push the date back, so all is good in the world right now.