Blackout notice required while preparing VCP?

[t.haley]

Plan administrator of MEP became aware of issues with one participating employer (use of incorrect compensation, late deferrals, incorrect calculation of deferrals and possible contributions by ineligible employees).  Until they could confirm participant balances were correct, plan administrator placed a hold on distributions for this participating employer only (not the MEP as a whole).  The hold will be in place until the plan administrator completes its investigation and determines whether a corrective action (VCP) is necessary.  Is a blackout notice required?  Obviously the ability to receive distributions is affected, but it is not the result of an administrative change (i.e., change in investment provider or recordkeeper).  The plan administrator does not want to distribute a participant account and later find out that the account was overstated.  Thoughts?

[Peter Gulia]

Unless the circumstances fit one of the rule’s specified exclusions, the rule’s definition of a blackout period does not turn on why there is a temporary restriction.
29 C.F.R. § 2520.101-3(d)(1)(i) https://www.ecfr.gov/current/title-29/part-2520/section-2520.101-3#p-2520.101-3(d)(1)(i).

[Artie M]

I guess I was wondering what is the authority that permits them to restrict the distributions during their period of decision making?