Major changes to a retirement plan that affect participants’ access to their investments, such as transferring to a new recordkeeper or fund manager, may require a blackout period. During this time, the ability for participants to select or change investment options, transfer assets, or obtain withdrawals and loans may be limited or restricted.
Plan sponsors must give participants 30 days’ advance notice of any blackout period that will last more than three consecutive business days.
Whether delivered electronically or in writing, blackout notices must include:
See our sample plan notices that you can customize to communicate with your employees. You can also contact your third-party administrator if you have questions.
In certain cases, exceptions to the 30-day advance notice requirement are allowed. However, participants must still be notified as soon as possible. Such exceptions include:
Corporate executives and directors cannot trade any of their own company stock or exercise stock options during blackouts.
A plan administrator may be fined up to $100 a day per participant for failure to provide notification of a blackout period.
Individuals convicted of an ERISA violation may face imprisonment of up to 10 years and/or fines up to $100,000. Entities convicted of violating ERISA may be fined up to $500,000.