The following Q&A will prove helpful in better understanding significant aspects of blackout periods for defined contribution retirement plans. For a more in-depth understanding of the DOL’s final rule issued in 2003, related to blackout periods, plan sponsors and interested parties should consult with qualified ERISA legal counsel.
|1. What is a blackout period under ERISA?||A blackout period is a period lasting more than 3 consecutive business days, during which participants (or beneficiaries) are suspended from directing or changing account balances, obtaining loans or obtaining distributions from the plan.|
|2. What are some examples that can trigger a black-out period requirement?||
|3. What events are excluded from the black-out period definition?||
|4. What are the blackout notice rules?||Sarbanes-Oxley added ERISA Section 101(i) to require plan administrators to provide ERISA plan participants with at least 30 days (but not more than 60 days) advance written notice before the last date prior to any black-out period of an individual account plans (e.g. 401(k) plans, profit sharing plans and ESOPs).|
|5. What information is required to be included in the black-out notice?||The black-out notice must include:
|6. How must the black-out notice be furnished to the participant?||The black-out notice is considered furnished on the date of mailing either by first-class mail, certified mail, or Express mail or privately delivered.Reasonably accessible electronic media communications are permitted.|
|7. What is the penalty for non-compliance with the black-out notice requirement?||The DOL can assess a civil penalty of $100 per day per individual for failure to satisfy the notice requirement, from the date of the administrator’s failure to provide notice.|
|8. What transactions are excluded from the 30-day black-out notice requirement but require notice as soon as reasonably possible?||
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