Summary Plan Description

What Is a Summary Plan Description?

A summary plan description (SPD) is a document an employer gives to their employees who are participating in retirement or health benefits plans covered under the U.S. Department of Labor’s Employee Retirement Income Security Act of 1974 (ERISA).

Examples of the retirement and health benefits plans that require a summary of description include:

A summary plan description contains important information regarding the provided retirement or health benefits plans, including:

In addition to informing employees on this important information, SPDs are also used to protect employers from potential legal action. For this purpose, the document should be reviewed by an attorney with SPD legal expertise.

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Are Employers Required to Provide Summary Plan Descriptions?

Yes, employers are required by law to provide summary plan descriptions, regardless of the number of employees or plan participants. However, there are some exceptions. Generally, SPDs are not required for plans that are established or maintained:

The employer alone is responsible for preparing, filing, and distributing SPDs. It is not the insurance company’s responsibility, nor does a Certificate of Insurance count as a summary plan description (a common misconception).

If an employer fails to provide, free of charge, a summary plan description to its employees who are participating in a covered retirement or health benefits plan, they may be issued costly fines.

What Does a Summary Plan Description Look Like?

A summary plan description should look professional, as it’s a legal document from an employer to its employees.

First, include the employer’s name and address, the plan administrator’s name and contact info, the plan name and year, and the employer tax identification number. Second, include the important information regarding the retirement and health benefits plans, such as a summary of benefits, the plan features, employee rights, employer/plan provider guarantees, etc. (see above).

Here are a few guidelines to follow when writing up a summary plan description:

Note that if 10% or more of your employees don’t speak English, you must provide an SPD in the other languages.

How Often Do Summary Plan Descriptions Need To Be Distributed?

Summary plan descriptions need to be distributed by an employer to plan participants within 120 days of a newly established program, or within 90 days after coverage begins. The delivery method should be reasonable and in a way that ensures receipt, whether via hand delivery, first-class mail, or electronically. Posting the SPD on a wall or on the employer’s intranet does not necessarily count as “likely to result in full distribution.”

An SPD must be updated and distributed every five years if any changes are made to it and every ten years if there are no changes. In the interim, SPD updates can be provided with a summary of material modifications (SMM) document.

What Is the Difference Between a Plan Document and a Summary Plan Description?

The difference between a plan document and a summary plan description is below: