Summary plan description

The Employee Retirement Income Security Act (ERISA) requires plan administrators — the people who run plans — to give plan participants in writing the most important facts they need to know about their retirement and health benefit plans including plan rules, financial information, and documents on the operation and management of the plan. Some of these facts must be provided to participants regularly and automatically by the plan administrator. Others are available upon request, free of charge or for copying fees.

One of the most important documents participants are entitled to receive automatically when becoming a participant of an ERISA-covered retirement or health benefit plan or a beneficiary receiving benefits under such a plan is a summary of the plan, called the summary plan description or SPD. The plan administrator is legally obligated to provide to participants, free of charge, the SPD. The summary plan description is an important document that describes, in language understandable to an average plan participant, the benefits, rights, and obligations they have in the plan. It provides information on when an employee can begin to participate in the plan, how services and benefits are calculated, when benefits become vested, when and in what form benefits are paid, and how to file a claim for benefits. If a plan is changed, participants must be informed, either through a revised SPD or in a separate document, called a summary of material modifications (SMM), which also must be given to participants free of charge. The rules for distributing the documents are stringent. Mailing them via first class mail is acceptable, but just making them available on the bulletin board is not sufficient.

The SPD must be provided to new participants within 90 days of becoming eligible for an existing plan. If a new plan is created, participants must receive an SPD within 120 days of the effective date.

In addition to the summary plan description, the plan administrator must automatically give participants each year a copy of the plan’s summary annual report (SAR). This is a summary of the annual financial report that most plans must file with the Department of Labor. These reports are filed on government forms called the Form 5500. The SAR is available at no cost. To learn more about the plan assets, participants may ask the plan administrator for a copy of the annual report in its entirety.

A participant has the right to request a copy of the SPD at any time and receive it within 30 days of the date of request. If participants are unable to get the SPD, the SAR or the annual report from the plan administrator, they may be able to obtain a copy by writing to the U.S. Department of Labor, EBSA, Public Disclosure Room, Room N-1513, 200 Constitution Avenue NW, Washington DC 20210, for a nominal copying charge. Participants should provide their name, address and phone number to enable the Employee Benefits Security Administration (EBSA) to contact them to follow up on the request. Substantial fines can be imposed on employers who do not respond to a participant’s request within the time period.