View Rule

Statement of Need: The Sarbanes-Oxley Act of 2002 (the Act), amended ERISA by adding a new section 101(i), which requires plan administrators to notify individual account plan participants in advance of any period during which their ability to give investment directions will be suspended. The Act also added a new section 502(c)(7) to ERISA authorizing the Secretary of Labor to assess civil penalties against a plan administrator who fails or refuses to provide the required notice. The Act specifically requires the Secretary of Labor to provide regulatory guidance to the public with regard to new section 101(i) and establishes deadlines for the issuance of such guidance.

Summary of the Legal Basis: The Act requires the Secretary to issue regulatory guidance by October 13, 2002, and a model notice by January 1, 2003. Section 505 of ERISA authorizes the Secretary to issue regulations clarifying the provisions of title I of ERISA.

Alternatives: The Department will develop regulatory alternatives after determining the scope and nature of the regulatory guidance needed by the public.

Anticipated Costs and Benefits: Determinations on the anticipated costs and benefits will be developed once determinations have been made with regard to the alternatives to be developed.

Risks: Failure to provide the regulatory guidance mandated by the Act would contravene the provisions of law. Moreover, failure to issue such guidance would increase the potential risks of loss to plan participants and beneficiaries, and deprive plan administrators of information they need to enable them to comply with the new notice requirements.