What it is:
A blackout period is a time period of roughly 60 days during which a company's employees are unable to make changes to their savings or retirement plans.
How it works/Example:
Nearly every organization offers employees non-taxable retirement savingsfactors such as risk preferences, financial goals and pre-tax contributions, there are a variety of controls in place that allow employees to make frequent changes to their portfolio composition or their financial contribution.
In most cases, such accounts are centrally-administered from within a company. As a result, a company may designate a blackout period for periodic accounting or review.
Why it matters:
Savings and retirement accounts play an important role in financial planning and security. Plans often change due to personal preferences or significant life events, people may need to adjust their savings accounts, accordingly.
Without the ability to make changes to or access funds from these accounts, a blackout period can represent a risk for the holders of these accounts. But a blackout period is necessary for the company to perform accounting, maintenance and other various activities.