Blackout Notice and Enrollment

[52626]

Plan will be entering Blackout 11/23/2015 and exiting Blackout 12/13/2015 - Changing Platforms.

Enrollment for new particiapnts is 12/1/2015. Platforms said the participants will not be able to enroll until the plan exits blackout.

This means the participants will miss 1 - 2 payrolls and not be able to defer.

Any issue with this. Does the Blackout "protect" the plan from not enrolling the participants until the middle of the month??

[Lou S.]

I'm not aware of any grace period for delaying enrollment or not allowing deferrals.

I think you have a reasonable administrative delay (changing providers) for delaying/suspending the deposits, until the accounts can be setup.

One administrative issue might be those payrolls are going to the old provider, in which case I'd assume you would have to enroll/default those participants into the old program.

[Bird]

Let's be accurate - of course new participants can enroll and have deferrals withheld, they just can't be deposited right away. There are a couple of approaches:

As noted by Lou S, you might (probably) have a reasonable administrative delay and can simply withhold and make the deposits later than they really should be. I'm not sure about the rules on that. Worst case is you add 10 cents of interest or whatever and move on.

You might decide to not withhold and use the new "oops" self correction that lets you just tell them you didn't withhold and that they can make it up later. It might be too late in the year for that though, I can't say I'm looking at or that familiar with those rules.

[hr for me]

Back in the day when blackouts were much longer (no daily plans) and you almost always had to finish a quarterly valuation prior to transfer, payroll got the deferral elections and processed them regardless of the blackout and the new recordkeeper received the documentation of the deferrals and new entries and processed those as the last step of the blackout process. I think you still need to withhold and then deal with how the new platform is going to accept those people.

I've never seen a blackout that (1) stops deferrals or (2) new entries. You could let those participants know their money will default to the default funds and they need to choose investments once the blackout is over since that is when the money will actually be deposited to their specific accounts.

The new recordkeeper needs to deal with the fact that they will be receiving deferrals on accounts that need to be setup in the blackout period. And honestly these days of daily accounting, 21 day blackout seems long. I can hardly believe that this is even an issue and would be questioning why the new platform/recordkeeper doesn't already have a solution to this issue as it must have come up many many times in the past. Can someone not manually get them into the system during the blackout process? Or if the elections are made via an HRIS system, can't payroll/HR create a feed that can be posted right before the blackout lifts and the deferrals are processed? I am wondering if the issue is that is it so automated (and that automation flows through the recordkeeper back to payroll rather than the other way around) that payroll and HR have forgotten how to do it the "old" way? Harken back to the olden days and you just might find a solution!