[Code of Federal Regulations]

[Title 29, Volume 9]

[Revised as of July 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 29CFR2520.101-3]



[Page 407-410]

 

                             TITLE 29--LABOR

 

 CHAPTER XXV--EMPLOYEE BENEFITS SECURITY ADMINISTRATION, DEPARTMENT OF 

                                  LABOR

 

PART 2520_RULES AND REGULATIONS FOR REPORTING AND DISCLOSURE--Table of 

Contents

 

         Subpart A_General Reporting and Disclosure Requirements

 

Sec.  2520.101-3  Notice of blackout periods under individual account 

plans.



    (a) In general. In accordance with section 101(i) of the Act, the 

administrator of an individual account plan, within the meaning of 

paragraph (d)(2) of this section, shall provide notice of any blackout 

period, within the meaning of paragraph (d)(1) of this section, to all 

participants and beneficiaries whose rights under the plan will be 

temporarily suspended, limited, or restricted by the blackout period 

(the ``affected participants and beneficiaries'') and to issuers of 

employer securities subject to such blackout period in accordance with 

this section.

    (b) Notice to participants and beneficiaries--(1) Content. The 

notice required by paragraph (a) of this section shall be written in a 

manner calculated to be understood by the average plan participant and 

shall include--

    (i) The reasons for the blackout period;

    (ii) A description of the rights otherwise available to participants 

and beneficiaries under the plan that will be temporarily suspended, 

limited or restricted by the blackout period (e.g., right to direct or 

diversify assets in individual accounts, right to obtain loans from the 

plan, right to obtain distributions from the plan), including 

identification of any investments subject to the blackout period;

    (iii) The length of the blackout period by reference to:

    (A) The expected beginning date and ending date of the blackout 

period; or

    (B) The calendar week during which the blackout period is expected 

to begin and end, provided that during such weeks information as to 

whether the blackout period has begun or ended is readily available, 

without charge, to affected participants and beneficiaries, such as via 

a toll-free number or access to a specific web site, and the notice 

describes how to access the information;



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    (iv) In the case of investments affected, a statement that the 

participant or beneficiary should evaluate the appropriateness of their 

current investment decisions in light of their inability to direct or 

diversify assets in their accounts during the blackout period (a notice 

that includes the advisory statement contained in paragraph 4. of the 

model notice in paragraph (e)(2) of this section will satisfy this 

requirement);

    (v) In any case in which the notice required by paragraph (a) of 

this section is not furnished at least 30 days in advance of the last 

date on which affected participants and beneficiaries could exercise 

affected rights immediately before the commencement of the blackout 

period, except for a notice furnished pursuant to paragraph 

(b)(2)(ii)(C) of this section:

    (A) A statement that Federal law generally requires that notice be 

furnished to affected participants and beneficiaries at least 30 days in 

advance of the last date on which participants and beneficiaries could 

exercise the affected rights immediately before the commencement of a 

blackout period (a notice that includes the statement contained in 

paragraph 5. of the model notice in paragraph (e)(2) of this section 

will satisfy this requirement), and

    (B) An explanation of the reasons why at least 30 days advance 

notice could not be furnished; and

    (vi) The name, address and telephone number of the plan 

administrator or other contact responsible for answering questions about 

the blackout period.

    (2) Timing. (i) The notice described in paragraph (a) of this 

section shall be furnished to all affected participants and 

beneficiaries at least 30 days, but not more than 60 days, in advance of 

the last date on which such participants and beneficiaries could 

exercise the affected rights immediately before the commencement of any 

blackout period.

    (ii) The requirement to give at least 30 days advance notice 

contained in paragraph (b)(2)(i) of this section shall not apply in any 

case in which--

    (A) A deferral of the blackout period in order to comply with 

paragraph (b)(2)(i) of this section would result in a violation of the 

requirements of section 404(a)(1)(A) or (B) of the Act, and a fiduciary 

of the plan reasonably so determines in writing;

    (B) The inability to provide the advance notice of a blackout period 

is due to events that were unforeseeable or circumstances beyond the 

reasonable control of the plan administrator, and a fiduciary of the 

plan reasonably so determines in writing; or

    (C) The blackout period applies only to one or more participants or 

beneficiaries solely in connection with their becoming, or ceasing to 

be, participants or beneficiaries of the plan as a result of a merger, 

acquisition, divestiture, or similar transaction involving the plan or 

plan sponsor.

    (iii) In any case in which paragraph (b)(2)(ii) of this section 

applies, the administrator shall furnish the notice described in 

paragraph (a) of this section to all affected participants and 

beneficiaries as soon as reasonably possible under the circumstances, 

unless such notice in advance of the termination of the blackout period 

is impracticable.

    (iv) Determinations under paragraph (b)(2)(ii)(A) and (B) of this 

section must be dated and signed by the fiduciary.

    (3) Form and manner of furnishing notice. The notice required by 

paragraph (a) of this section shall be in writing and furnished to 

affected participants and beneficiaries in any manner consistent with 

the requirements of Sec.  2520.104b-1 of this chapter, including 

paragraph (c) of that section relating to the use of electronic media.

    (4) Changes in length of blackout period. If, following the 

furnishing of a notice pursuant to this section, there is a change in 

the length of the blackout period (specified in such notice pursuant to 

paragraph (b)(1)(iii) of this section), the administrator shall furnish 

all affected participants and beneficiaries an updated notice explaining 

the reasons for the change and identifying all material changes in the 

information contained in the prior notice. Such notice shall be 

furnished 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.



[[Page 409]]



    (c) Notice to issuer of employer securities. (1) The notice required 

by paragraph (a) of this section shall be furnished to the issuer of any 

employer securities held by the plan and subject to the blackout period. 

Such notice shall contain the information described in paragraph 

(b)(1)(i), (ii), (iii) and (vi) of this section and shall be furnished 

in accordance with the time frames prescribed in paragraph (b)(2) of 

this section. In the event of a change in the length of the blackout 

period specified in such notice, the plan administrator shall furnish an 

updated notice to the issuer in accordance with the requirements of 

paragraph (b)(4) of this section.

    (2) For purposes of this section, notice to the agent for service of 

legal process for the issuer shall constitute notice to the issuer, 

unless the issuer has provided the plan administrator with the name of 

another person for service of notice, in which case the plan 

administrator shall furnish notice to such person. Such notice shall be 

in writing, except that the notice may be in electronic or other form to 

the extent the person to whom notice must be furnished consents to 

receive the notice in such form.

    (3) If the issuer designates the plan administrator as the person 

for service of notice pursuant to paragraph (c)(2) of this section, the 

issuer shall be deemed to have been furnished notice on the same date as 

notice is furnished to affected participants and beneficiaries pursuant 

to paragraph (b) of this section.

    (d) Definitions. For purposes of this section--

    (1) Blackout period--(i) General. The term ``blackout period'' 

means, in connection with an individual account plan, any period for 

which any ability of participants or beneficiaries under the plan, which 

is otherwise available under the terms of such plan, to direct or 

diversify assets credited to their accounts, to obtain loans from the 

plan, or to obtain distributions from the plan is temporarily suspended, 

limited, or restricted, if such suspension, limitation, or restriction 

is for any period of more than three consecutive business days.

    (ii) Exclusions. The term ``blackout period'' does not include a 

suspension, limitation, or restriction--

    (A) 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);

    (B) Which 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;

    (C) Which 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

    (D) Which 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.

    (2) Individual account plan. The term ``individual account plan'' 

shall have the meaning provided such term in section 3(34) of the Act, 

except that such term shall not include a ``one-participant retirement 

plan'' within the meaning of paragraph (d)(3) of this section.

    (3) One-participant retirement plan. The term ``one-participant 

retirement plan'' means a one-participant retirement plan as defined in 

section 101(i)(8)(B) of the Act.

    (4) Issuer. The term ``issuer'' means an issuer as defined in 

section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c), the 

securities of which are registered under section 12 of the Securities 

Exchange Act of 1934, or that is



[[Page 410]]



required to file reports under section 15(d) of the Securities Exchange 

Act of 1934, or files or has filed a registration statement that has not 

yet become effective under the Securities Act of 1933 (15 U.S.C. 77a et 

seq.), and that it has not withdrawn.

    (5) Calendar week. For purposes of paragraph (b)(1)(iii)(B), the 

term ``calendar week'' means a seven day period beginning on Sunday and 

ending on Saturday.

    (e) Model notice--(1) General. The model notice set forth in 

paragraph (e)(2) of this section is intended to assist plan 

administrators in discharging their notice obligations under this 

section. Use of the model notice is not mandatory. However, a notice 

that uses the statements provided in paragraphs 4. and 5.(A) of the 

model notice will be deemed to satisfy the notice content requirements 

of paragraph (b)(1)(iv) and (b)(1)(v)(A), respectively, of this section. 

With regard to all other information required by paragraph (b)(1) of 

this section, compliance with the notice content requirements will 

depend on the facts and circumstances pertaining to the particular 

blackout period and plan.

    (2) Form and content of model notice.



                 Important Notice Concerning Your Rights



            Under The [Enter Name of Individual Account Plan]



    [Enter date of notice]



    1. This notice is to inform you that the [enter name of plan] will 

be [enter reasons for blackout period, as appropriate: changing 

investment options, changing recordkeepers, etc.].

    2. As a result of these changes, you temporarily will be unable to 

[enter as appropriate: direct or diversify investments in your 

individual accounts (if only specific investments are subject to the 

blackout, those investments should be specifically identified), obtain a 

loan from the plan, or obtain a distribution from the plan]. This 

period, during which you will be unable to exercise these rights 

otherwise available under the plan, is called a ``blackout period.'' 

Whether or not you are planning retirement in the near future, we 

encourage you to carefully consider how this blackout period may affect 

your retirement planning, as well as your overall financial plan.

    3. The blackout period for the plan [enter the following as 

appropriate: is expected to begin on [enter date] and end [enter date]/

is expected to begin during the week of [enter date] and end during the 

week of [enter date]. During these weeks, you can determine whether the 

blackout period has started or ended by [enter instructions for use 

toll-free number or accessing web site].

    4. [In the case of investments affected by the blackout period, add 

the following: During blackout period you will be unable to direct or 

diversify the assets held in your plan account. For this reason, it is 

very important that you review and consider the appropriateness of your 

current investments in light of your inability to direct or diversify 

those investments during the blackout period. For your long-term 

retirement security, you should give careful consideration to the 

importance of a well-balanced and diversified investment portfolio, 

taking into account all your assets, income and investments.] [If the 

plan permits investments in individual securities, add the following: 

You should be aware that there is a risk to holding substantial portions 

of your assets in the securities of any one company, as individual 

securities tend to have wider price swings, up and down, in short 

periods of time, than investments in diversified funds. Stocks that have 

wide price swings might have a large loss during the blackout period, 

and you would not be able to direct the sale of such stocks from your 

account during the blackout period.]

    5. [If timely notice cannot be provided (see paragraph (b)(1)(v) of 

this section) enter: (A) Federal law generally requires that you be 

furnished notice of a blackout period at least 30 days in advance of the 

last date on which you could exercise your affected rights immediately 

before the commencement of any blackout period in order to provide you 

with sufficient time to consider the effect of the blackout period on 

your retirement and financial plans. (B) [Enter explanation of reasons 

for inability to furnish 30 days advance notice.]]

    6. If you have any questions concerning this notice, you should 

contact [enter name, address and telephone number of the plan 

administrator or other contact responsible for answering questions about 

the blackout period].



    (f) Effective date. This section shall be effective and shall apply 

to any blackout period commencing on or after January 26, 2003. For the 

period January 26, 2003 to February 25, 2003, plan administrators shall 

furnish notice as soon as reasonably possible.



[68 FR 3727, Jan. 24, 2003]



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