A 401(k) is a great tool to help you save for retirement, but hearing that you might have to deal with a 401K blackout period can be frightening. A blackout period can mean you aren’t able to select new investments or make withdrawals, and knowing that your money is there but that you cannot touch it can be nerve-wracking.
This guide will help you understand what 401K blackout periods are, why they are necessary, how it affects your retirement, and how long they last.
What is a 401(k)?
What is a 401(k) Blackout Period?
A 401(k) blackout period is a period of time — usually up to 60 days — during which you cannot make changes to your investment options. This often occurs when you or your employer change 401(k) plan administrators. Plan participants should receive notice at least 30 days before the period starts, giving them opportunities to ask their providers or employers questions, plus review their investment options and make any changes.
During the time when your 401(k) plan provider is changing, you do not have access to your assets or your records and cannot see your investment options, make changes, or view your portfolio value. Any contributions you make (including any loan payments) to your 401(k) will still occur, though, and there is nothing inherently dangerous about this process.
Quick Facts You Need to Know About 401K Blackout Periods
- 401K Blackout Periods are periods of time when employers suspend their employees’ access to employer-sponsored retirement plans.
- During Blackout Periods, employees cannot access their account, borrow money or make contributions to their accounts.
- Generally, these periods last anywhere from a few days up to six months and are typically used when the plan is being amended or restructured.
- During this time, it can be difficult for employees to plan for their retirement savings goals as they cannot access the information they need and make changes to their accounts.
- All employers must give advance notice (at least 30 days) before instituting a Blackout Period in order to comply with ERISA regulations.
- It’s important for all employees to understand how these blackout periods work so that they can plan accordingly and not miss any opportunities for planning for retirement.
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401(k) Blackout Period FAQs
1. Why would my company change plan providers?
2. How long does a blackout period last?
3. I can't see my funds, are they gone forever?
4. What if I need to access my funds?
5. Will this cost me anything?
6. What do I need to do before the blackout starts?
Have Additional 401(k) or Retirement Planning Questions?
Understanding investments is not always easy, but rest assured that 401(k) blackout periods are both normal and common. They are also highly regulated, so your plan administrator must take proactive steps to keep your money safe and working for you — even when you cannot see it. This is a normal and secure process, but it does cause plan participants worry and stress.
Speak with a trusted financial advisor today to have all your 401(k) blackout period questions answered, along with any other retirement and tax planning questions you may have. Our tax attorneys are experienced in setting up retirement income in a way that minimizes your future burden. The expert team at Silver Tax Group can help you figure out your best investment options to give you a worry-free retirement. Give us a call to set up a consultation.