What Is A Blackout Period? Why Is My Plan in Blackout?

Ivan S. from Staten Island, NY asks, "What Is A Blackout Period? Why Is My Plan in Blackout?"

Pension Evaluators & QDROS Of Troyan, Inc Associates Group answers, "As a result of the Enron Scandal of 2001, the Sarbanes-Oxley Act was adopted by Congress; through which there is a new regulation regarding these “blackout periods”.

In response to the Enron scandal of 2001, Congress adopted the Sarbanes-Oxley Act issuing new regulation regarding "blackout periods." A blackout period is a period lasting more than three consecutive business days during which the plan administrator temporarily suspends your right to direct account investments, obtain a plan loan, or receive a distribution. Under the Act, the DOL requires a notice be given to plan participants if a blackout period is to occur. This notice must be written in a manner that can be understood by the average plan participant and be issued to the participants at least 30 days but not more than 60 days in advance of the last date on which participants can exercise the rights affected by the blackout.

The Sarbanes-Oxley Act also places restrictions on the activities of directors or executive officers during blackout periods, prohibiting them from dealing in employer securities both directly and indirectly. These prohibitions generally do not apply to small, privately held companies. Exceptions are also made for prearranged transactions and transactions outside the officer's control, such as dividend reinvestments, stock splits, acquisitions via gifts, wills, or domestic relations orders, and similar transactions. Violators are subject to SEC enforcement and may be sued by the issuer or shareholders for the difference between the amount involved on the date of the transaction and the amount which would have been received after the blackout period."

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Just click here to begin the process to begin the application process forms on this site (or direct your client to do so), along with prepayment of our fee, either by check or credit card (online). For more information, call to speak with our QDRO experts at 800-221-0706 and reference the state for your Divorce matter for discussions.