NFIB

DOL Issues Rules for Pension Blackout Periods
10/22/2002

The U.S. Department of Labor yesterday published interim rules implementing a new federal law requiring 401(k) plans to give participants 30-day notice of blackout periods that affect their rights to take loans, receive distributions or direct investments.

On July 30 President Bush signed the Sarbanes-Oxley Act of 2002 giving the Labor Department authority to distribute interim final rules. The DOL stipulates that plan administrators provide participants with reasons for the blackout period, a description of the rights that will be suspended and the exact dates the blackout is to occur. Blackouts typically occur when plans change investment options or add participants due to a corporate merger or acquisition.

"President Bush's retirement security proposals to protect American workers called for advance notice of blackout periods and restrictions on corporate insiders from trading their own stock when workers are frozen. These rules are the first regulatory action to implement components of the president's retirement security plan," said Labor Secretary Elaine Chao. "Workers will now be empowered to take control of their retirement assets and make informed decisions to manage their retirement accounts in advance of a blackout."