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February 18, 2009

What is a blackout period?

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Blackout Period

Definition

Period of more than three consecutive business days, during which participants and beneficiaries under the plan are restricted from performing transactions that would otherwise be available. These transactions include directing investments, diversify assets credited to their accounts, obtaining loans from the plan, or obtaining distributions from the plan .

Plans that are not subject to title I of ERISA are not subject to the blackout notice provisions. Therefore, one-participant plans are not subject to the black-out notice.  For this purpose, a  one-participant plan means a retirement plan that on the first day of the plan year: (1) covered only one individual (or the individual and the individual’s spouse) and the individual (or the individual and the individual’s spouse) owned 100 percent of the plan sponsor (whether or not incorporated), or (2) covered only one or more partners (or partners and their spouses) in the plan sponsor.

Referring Cite

DOL Reg. §2520.101-3(d)(1), DOL Reg. §2560.502c-7, ERISA §502(c)(7); Sarbanes-Oxley Act of 2002

Additional Helpful Information

The term “blackout period” does not include a suspension, limitation, or restriction which:

  • Occurs by reason of the application of the securities laws (as defined in section 3(a)(47) of the Securities Exchange Act of 1934);
  • Is a regularly scheduled suspension, limitation, or restriction under the plan (or change thereto), provided that such suspension, limitation or restriction (or change) has been disclosed to affected plan participants and beneficiaries through the summary plan description, a summary of material modifications, materials describing specific investment alternatives under the plan and limits thereon or any changes thereto, participation or enrollment forms, or any other documents and instruments pursuant to which the plan is established or operated that have been furnished to such participants and beneficiaries;
  • Occurs by reason of a qualified domestic relations order or by reason of a pending determination (by the plan administrator, by a court of competent jurisdiction or otherwise) whether a domestic relations order filed (or reasonably anticipated to be filed) with the plan is a qualified order within the meaning of section 206(d)(3)(B)(i) of the Act; or
  • Occurs by reason of an act or a failure to act on the part of an individual participant or by reason of an action or claim by a party unrelated to the plan involving the account of an individual participant.

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

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