What is a typical "black-out period" to move qualified plan assets from one trustee to another (ie, to new investment options with the new trustee) in a quarterly-valued plan? I realize that this would vary depending on the investments that have to be liquidated to
accomodate the transfer to a new trustee. I am looking for what "typically" happens. I am interested in what typically happens.

Is it reasonable in a quarterly-valued plan for the terminated trustee to transfer the funds to the new trustee within two weeks, but not to provide the new trustee with data necessary to allocate the money for five months?

Any thoughts would be greatly appreciated.

We have had RECORDKEEPERS ask for as much as 90 days, but the actual amount of time that the system is down is always much less. However, your post mentions trustees. A transfer of trustees should not require much of a black out. I assume that you are referring to trustee/recordkeepers. My experience is that the "system" (investment and deferral election change capabilities and the ability to recieve deposits) is down for 2-4 weeks.

Alf - thanks for your response. Your assumption that I was referring to trustee/recordkeepers is correct. Your experience of 2-4 weeks is the same as my experience. I have a situation where a trustee/recordkeeper failed to pass on allocation information to another trustee/recordkeeper for FIVE MONTHS (though the trust assets were passed on in two weeks). That is, the old trustee turned the assets over to the new trustee, but did not give the allocation data necessary to actually allocate those assets for an additional five months. Accordingly, the assets sat in a money market account earning 2% for five months. The value of the assets was about 4 million dollars, so the lost earnings is fairly substantial.

It sounds like the original administrative services agreement would control your recourse. Hopefully, it speficies the format and timing required of requests for the transfers of records. It also should address your recourse for a breach. Unfortunately, ASAs are rarely negotiated very carefully (except for the fee and expense provisions), so it may not help you much. We frequently have to 'ride' recordkeepers that are being phased out in order to keep the transisions on schedule, although they really do not have anything to gain from drawing the process out. Good luck.

Beth,

I assume you are referring to a balance forward situation vs. a daily valued plan. I am also assuming that assets in each participant's account are invested at the direction of the participant.

We would either "map" funds into comparable options or make an effort to accurately estimate participant balances as of the most recent valuation available at the time assets are transferred and apply participant elections to those balances, pending receipt of a final valuation. As a trustee, it is only under the most extreme circumstances that I would hold assets in money market funds for that long.

Steve - thanks for your response. Your assumptions are correct. It is a quarterly valued, balance forward plan that is participant directed. I have always thought this type of conversion should take between 2 to 6 weeks in a plan that is not daily valued. The trustee/recordkeeper had all the information needed from the client in order to prepare allocation data, etc. and the conversion was made on a new plan year basis (ie, the plan year was 1-1 to 12-31 and the change was to be effective 1-1). The trustee/recordkeeper has no real excuse at this point as to why it was unable to give the appropriate allocation information.

At this point, I have talked to only one individual who thought five months was "no big deal" and that it "happens all the time."
Even if it does happen all the time, I personally do not think five months is reasonable beyond very extenuating circumtances.

How would the employer go about correcting the lost earnings problem with respect to dealing with the IRS or possibly the DOL? It would appear to be a matter of restoring the participants based on the highest rate of return earned by any of the investment alternatives, but how would that contribution get into the plan in a deductible fashion and without threatening plan qualification???

Beth:

I wouldn't assume that simply because the funds were in a money market account that participants lost out. Given what has happened in the stock market lately, participants would often have been better off if their funds had been uninvested.

Whatever the typical period is may change after the Enron litigation.

Does anyone know how long the infamous Enron blackout period was?

http://www.washingtonpost.com/wp-dyn/artic...-2001Dec18.html

Participants and the company give differing accounts of how long the Enron blackout was. Neither side is arguing that the blackout was any longer than 20 trading days, though. Funny how the details make the story seem different to someone familiar with such blackout periods.

BFree: answer to your question about Enron:

http://www.plansponsor.com/eprise/main/Pla...nance/enronreax