Posted on: Thursday, February 20, 2003

Changes in 401(k) 'blackouts' set to begin

Associated Press

WASHINGTON — Starting next week, about 40 million Americans invested in 401(k) plans must get 30 days' notice when their employers want to block access to the accounts for administrative changes.

The post-Enron regulation, issued by the Labor Department last week, was required as part of a new law enacted last summer to deal with a wave of corporate accounting scandals.

The new requirement was just a small change proposed after the scandals to tighten protections for workers. But as the public furor over Enron and WorldCom eased, so did the urgency for Congress to act.

The 30-day notice of blackout periods — in which employees can't make changes to their plans or access their money — was about all that Republicans and Democrats could agree on last session, so other proposed changes aimed at protecting 401(k) account holders died.

In the notices, employers or plan administrators must state the reasons for the blackout, the start and end dates and a statement advising an evaluation of investments based on an inability to make changes during the period.

Failure to provide the 30-day notice is a fine up to $100 per day per plan participant.