NU Online News Service, Feb. 25, 2:58 p.m. – The American Society of Pension Actuaries, Arlington, Va., says a survey of 250 firms that run 85,000 employee-directed retirement plans suggest that 401(k) plans experience “lockdowns” roughly once every four years.
The average duration tends to be three weeks to four weeks, but lockdowns at smaller plans can last two months or longer, ASPA says.
A lockdown period is required when an employer changes its pension plan service provider. During the transition, plan participants cannot make changes to their pension plan accounts.
The lockdown concept attracted attention late in 2001 and early this year, when members of a large 401(k) plan sponsored by Enron Corp., Houston, complained that a badly timed lockdown period prevented them from shifting funds out of Enron stock at a time when the value of Enron shares was plummeting.
ASPA argues that administrators of small 401(k) plans need the ability to impose long lockdown periods, because changing from one plan service provider to another is particularly difficult for administrators of small plans.