New Blackout Notice Requirements?

[Logan401]

Can anyone confirm that effective November 1, 2011, the new disclosure regulations will affect the blackout notice requirements?

I was informed that all eligible participants in a plan that is transferring are required to receive a blackout notice, & not only those that have account balances in the transferring plan.

Any insight would be appreciated!

[Guest Tom:]

For plan years beginning on or after Nov. 1, 2011, DOL reglations regarding the fiduciary disclosure requirements for participant directed-individual account plans under Labor Reg. § 2550.404a-5 are integrated with the disclosure requirements for ERISA § 404© plans to avoid having different disclosure rules for plans intending to comply with the ERISA § 404© requirements. Preamble to Labor Reg §2550.404a-5. Therefore, for plan years beginning on or after Nov. 1, 2011, the fiduciary relief provided for self-directed accounts under Labor Reg. § 2550.404c-1(d)(2)(i) (including the relief during blackouts under ERISA § 404©(1)(B)) will not serve to relieve a fiduciary from its duty to prudently select and monitor any service provider or designated investment alternative offered under the plan. Labor Reg. § 2550.404c-1(d)(2)(iv) .

[Logan401]

Tom, thanks for your reply.

Peace Out!

[Guest Sieve]

The change to the regs under 404a & 404c notwithstanding, the blackout notice regs (2520.101-3) have not been changed (to my knowledge), so only "affected participants and beneficiaries" have to reveive the notice--even after 11/1/11.

If the blackout period overlaps an enrollment/entry date--unlikely in a conversion--wouldn't that mean that anyone eligible to defer, even if not already deferring, might be an affected participant (because rights relating to that individual are potentially being limited by the blackout period)?

[Guest Tom:]

I don't think an "affected participant" includes employees who are not participants becasue the blackout definition does not include enrollment. ERISA § 101(i)(7)(A) and Labor Reg. § 2520.101-3(d)(1)(i) define blackout as a period when the ability "to direct or diversify assets credited to their accounts, to obtain loans from the plan, or to obtain distributions from the plan is temporarily suspended, limited, or restricted ..." It appears that affected particpants only includes employees that already have accounts (e.g., assets credited to their accounts).

[Guest Sieve]

I don't disagree with you. I'm really asking a question: if the enrollment period were from 12/27 until 1/27, would those potentially enrolling as of 1/1 be affected participants (since their ability to borrow or take a hardship distribution of their potential deferrals would be impacted by the blackout)?

[Logan401]

More than likely not since they will most likely be enrolling in the successor plan.