Blackout periods are a critical, yet often underestimated, aspect of 401(k) migrations. For HR and Finance teams, these events can create participant anxiety and operational complexity, but also become a regulatory minefield if mishandled. According to a 2002 survey of benefits professionals discussed in a Congressional hearing, 74% of surveyed 401(k) plans had undergone a blackout period, a figure that highlights how common and impactful these transitions are for employers and employees alike (govinfo.gov).

The U.S. Department of Labor has emphasized that blackout periods "typically occur when plans change record keepers or investment options, or add participants due to a corporate merger or acquisition" (dol.gov). To help reduce disruption and maintain compliance, this checklist is tailored for employer plan sponsors tasked with communicating and supporting their teams through a blackout period. For a library of employer-focused resources, visit our 401(k) resources page.

The Short Answer: What Is a 401(k) Blackout Period?

A 401(k) blackout period is a temporary window, often ranging from three to ten business days, when plan participants are restricted from making changes to their retirement accounts. These restrictions typically include suspending account transfers, loan requests, and investment changes for participants, and may also limit company executives’ trading activity in company stock during this window.

The Department of Labor mandates that plan administrators provide at least 30 days’ advance notice to support transparency, stating:

"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." (dol.gov)

For detailed guidance on blackout periods and other plan administration topics, see our 401(k) resources.

What a Blackout Period Is (and What It Is Not)

A blackout period is a duration of time when participants will have reduced control over their 401(k) accounts. This period most commonly occurs when plan assets and records are being transferred from one retirement service provider to another, or when a plan undergoes significant changes such as updating investment options or merging with another employer plan.

Blackout periods are temporary and do not jeopardize the safety of participant assets.

Participants' existing investments will continue to follow market performance, and their account balances remain secure throughout the blackout. It's important for sponsors and employees to understand that these restrictions are standard administrative safeguards rather than indicators of financial instability.

Pre-Blackout Checklist: What to Confirm Before the Freeze

Advance planning is crucial. Here’s how to prepare for a 401(k) migration checklist before the blackout begins:

1. Confirm Dates and Scope: Establish the planned start and end date for the blackout period and define which participant actions will be restricted.

2. Draft and Deliver Participant Notice: Federal law requires that written notice be sent to participants at least 30 days but not more than 60 days before the last date on which they can exercise the affected rights immediately prior to the commencement of the blackout period. The Department of Labor warns that, "Failure or refusal to provide the required notice will result in civil penalties" (dol.gov).

3. Clarify What Freezes: Specify which account functions (transfers, loans, distributions, investment changes) will be unavailable.

4. Set a Communication Schedule: Plan a cadence for reminders leading up to the blackout. Include a point of contact for participant questions.

5. Establish a Support Path: Train your HR and support teams to respond to participant inquiries and escalate urgent concerns promptly.

6. Regularly reviewing provider performance and past blackout experiences can help anticipate issues and reduce future disruptions.

Tip: Schedule blackouts during periods of historically low participant activity if possible.

For a full transition preparation guide, see our Provider Transition Checklist for HR.

During Blackout Checklist: Managing the Freeze

The blackout period requires vigilant monitoring and clear communication. Proactive outreach helps participants navigate temporary restrictions and reassures them that their assets remain safe.

The Department of Labor’s model notice advises participants to "carefully consider how this blackout period may affect your retirement planning, as well as your overall financial plan" (dol.gov).

• Daily Checks: Monitor for unexpected participant issues or technical disruptions.

• Ticket Triage: Set up a system for quickly identifying and escalating participant concerns.

• Employee Reminders: Send brief, periodic updates using multiple communication channels so that all participants are informed about the blackout’s status.

• Escalation Triggers: Define conditions for immediate response if a systemic issue or error is detected.

• Equip HR teams with an FAQ to address participant questions efficiently during the blackout.

For ready-to-use participant communication, consult our Employee Communication Templates for Provider Changes.

Post-Blackout Checklist: What to Verify and Communicate

Once the blackout period ends, employers should:

1. Verify Balances: Ensure all participant accounts reflect correct balances and contributions.

2. Restore Access: Confirm that employees can log in, view, and change their accounts as normal.

3. Payroll Sync: Double-check that payroll deferrals and employer matches are flowing to the new provider.

4. Reporting: Review transition reports for accuracy and address any anomalies.

5. Collect Feedback: Encourage participants to report any discrepancies or concerns, and address them promptly.

Maintain detailed records of all communications and issue resolutions in case of regulatory review.

Industry best practices consistently recommend thorough verification and communication to support participant satisfaction and compliance with regulatory expectations. For guidance on reaching operational steady-state, see our Thirty Sixty Ninety Day Guide.

Top Employee Questions During a Blackout (FAQ)

HR and Finance teams should anticipate and be ready to answer the most common participant questions:

• Can I change my deferral or investment elections?
  Typically, no changes can be made during a blackout period. All existing instructions remain in effect until the blackout ends.

• Can I take a loan or request a withdrawal?
  No, these actions are generally not permitted during the blackout window.

• Will my contributions still be deposited?
  Yes, but contributions will be processed according to existing instructions and may not be visible in the account until the blackout concludes.

• Where do I see my account?
  Participants can log in and view balances, but transaction functions may be limited.

Participant anxiety may be heightened if the blackout coincides with a period of market volatility, underscoring the need for thorough communication.

As the Department of Labor highlights, empowering employees with clear and timely information enables them to make informed decisions and reduces anxiety during blackout periods (dol.gov).

Participants have a legal right to advance notice of blackout periods.

For more participant-focused answers, visit our For Individuals page.

CTA for Employers: Plan Your Next Steps

Carrying out a smooth and compliant blackout period is a critical responsibility for every employer plan sponsor. By following a thorough checklist, from advance planning and clear communication to diligent post-blackout verification, you fulfill your legal obligations and build trust with your team.

Ready to make your next 401(k) provider transition easier? Get started (for employers)

References

U.S. Department of Labor. (2002). Labor Department Issues Rules On Disclosure Of Pension Plan 'Blackout Periods'. https://www.dol.gov/newsroom/releases/ebsa/ebsa20021018?utm_source=openai

U.S. Department of Labor. (n.d.). Blackout Period Model Notice. https://www.dol.gov/sites/dolgov/files/EBSA/employers-and-advisers/plan-administration-and-compliance/retirement/blackout-period-model-notice.pdf?utm_source=openai

Guideline. (n.d.). What is a blackout period? https://help.guideline.com/en/articles/8593680-what-is-a-blackout-period?utm_source=openai

U.S. Government Publishing Office. (2002). Congressional Hearing, 107th Congress: 401(k) Plan Blackouts and Participant Protections. https://www.govinfo.gov/content/pkg/CHRG-107shrg77706/pdf/CHRG-107shrg77706.pdf?utm_source=openai