“My client is changing his 401(k) plan to a new record keeper and is under a blackout. We anticipate the blackout may go longer than what he initially disclosed to the participants. What are the participant notification requirements when the end of a blackout period is extended?”

ERISA consultants at the Retirement Learning Center Resource Desk regularly receive calls from financial advisors on a broad array of technical topics related to IRAs and qualified retirement plans.

Highlights of discussion

• Pursuant to DOL Reg. Sec. 2520.101(b)(4), if a plan’s blackout period will run for a longer period than was initially disclosed to the participants, the plan sponsor must furnish a new notice to indicate the change.
• The updated notice must
  • 1. Explain the reasons for the change; and
  • 2. Identify all material changes in the information contained in the prior notice.
• The plan sponsor must furnish the updated notice to all affected participants and beneficiaries as soon as reasonably possible, unless such notice in advance of the termination of the blackout period is impracticable.
• The DOL also expects that where a plan administrator has the ability to provide notice to some participants earlier than others, the administrator should provide the notice even if notice to other participants would not be practicable.

Conclusion

If a 401(k) plan’s blackout period will run past the previously disclosed end date, the plan sponsor has the obligation to issue a second updated notice to affected participants and beneficiaries.