Blackout notice not sent--one participant

[BG5150]

A plan is transitioning into our platform from another provider.  We provided blackout notices to (mostly) everyone.  Due to a census snafu, a terminated participant was not included in the notice distribution.

Now he is calling the broker saying no one told him his money was moving.  The broker is yelling at us saying we are in violation of ERISA.  (BTW, we provide 3(16) Administration)

What is the remedy besides sending out the notice and typing up a mea culpa?

The violation isn't self-reporting is it?  Do you think we are not he hook for $131/day?

[Lou S.]

I think the remedy is to as you say send out the notice as soon as it is discovered with the administrative reason for delay.

As a disgruntled former employee you might want to include a withdrawal package that you'll offer to process as soon as the blackout period ends.

[Peter Gulia]

You might want your lawyer’s advice about:

 

whether reporting the circumstances to your liability insurer is your obligation under your contract, or is only a condition for coverage;

 

what after-the-fact notice or written explanation might make sense;

 

whether to offer to adjust the affected participant’s account for some investment-direction opportunity she claims she missed because she lacked notice of the blackout;

 

the exact meaning of Form 5500 Schedule I item 4n’s query and the instruction for it, and whether a proper response is Yes or No;

 

if that response is No, whether a written explanation attached to the Form 5500 report might be helpful or harmful.

 

How those and related points play might affect how likely it is or isn’t that the Secretary of Labor becomes aware of the failure, or assesses an ERISA § 502(c)(7) civil penalty.

 

If you get Labor’s notice of intent to assess a penalty, observe that 29 C.F.R. § 2560.502c-7(d)-(e) allows not assessing the penalty if the Labor department is persuaded by your reasonable-cause explanation.

[Bird]

Say "oops/sorry" and move on.  (I think) the only consequence would be for potential losses due to lack of knowledge of the situation, and 1) it's unlikely there are/were any, and 2) it can't be worth an actual lawsuit.  Ask what they want to do about it...

Mr. Practical

[Peter Gulia]

With a lawyer-client relationship and more facts, I might be inclined toward that view.

But if I were to express it in a social-media forum, I'd have liability exposure and might breach a statement made to my malpractice insurer.