Summary Plan Description (SPD)
Summary Definition: A required document explaining the rights, benefits, and responsibilities of employees and beneficiaries enrolled in a benefits or retirement plan covered by the Employee Retirement Income Security Act (ERISA).
What is a Summary Plan Description (SPD)?
A summary plan description (SPD) is a required document for employees and beneficiaries participating in retirement or health benefit plans covered by the Employee Retirement Income Security Act (ERISA).
Summary plan descriptions provide an overview of plan details, including eligibility, benefits offered, vesting, payment processes, and claim procedures. The document also includes participants' rights under ERISA, helping them understand their entitlements and responsibilities.
Plan administrators must ensure an SPD uses clear, easily understandable language and provide it to participants free of charge within 90 days of enrollment. Updates to the plan must be communicated through a revised SPD or a summary of material modifications (SMM).
Key Takeaways
- A summary plan description (SPD) is a required document for any benefits or retirement plan covered by the Employee Retirement Income Security Act (ERISA).
- SPDs use simple, plain language to provide an overview of a plan’s most important details (e.g., claims processes, calculation methods, vesting periods, etc.)
- Plan administrators may distribute SPDs electronically as long as recipients are notified of the electronic version and their right to request a printed one.
What is ERISA?
ERISA, enacted in 1974, safeguards the benefits and rights of most private-sector retirement and health plan participants. Enforced by the Department of Labor’s Employee Benefits Security Administration (EBSA), ERISA establishes minimum standards for transparency, accountability, and fiduciary responsibility in managing plan assets. Later amendments (e.g., COBRA and HIPAA) have enhanced its protections, particularly for health coverage.
Under ERISA, plan administrators must regularly provide participants with essential information about plan rules and features. Participants also have the right to resolve disputes through grievance and appeals processes or sue the administrator for breaches of fiduciary duty.
Some employers and plans, however, are exempt from ERISA guidelines. For example, churches, governmental plans, and certain international plans don’t have to provide a plan summary description.
Learn More: 10 Steps to a Simplified Open Enrollment
What is the Purpose of a Summary Plan Description?
Aside from being a legal requirement, a summary plan description serves two purposes: 1) to provide participants and beneficiaries with a clear understanding of their benefits and 2) to protect employers from potential legal disputes regarding those benefits.
By outlining key details such as eligibility, coverage, exclusions, and claims procedures, the summary of plan description ensures transparency and reduces misunderstandings. As such, SPD requirements apply to several plan types, including:
- Health insurance (e.g., medical, dental, vision, etc.)
- 401(k) retirement plans
- Health reimbursement arrangements (HRAs)
- Pension plans
- Flexible spending accounts (FSAs)
- Profit-sharing or stock plans
- Employee Assistance Plans (EAPs)
Secondly, a plan summary description helps safeguard employers from lawsuits by defining each plan’s rules, limitations, requirements, etc. Employers should, therefore, make each retirement and benefits SPD as comprehensive as possible and have them reviewed by a legal expert.
Working with an HR provider or partner with benefits administration tools or summary plan description software can also be helpful. Document management features, for example, can be useful for storing SPDs and accessing them whenever necessary.
Summary Plan Description Contents
According to ERISA regulations, a summary plan description must present key details about a retirement or benefits plan in clear, plain language to ensure an average participant or beneficiary easily understands the information.
To that end, commonly used pieces of information include the plan’s:
- Name and type
- Claims process
- Vesting schedule
- Eligibility criteria
- Contribution calculations
- Fiduciary responsibilities
- Grievance and appeals process
- Termination provisions
Finally, each SPD should explain the participant and beneficiary’s rights guaranteed under ERISA, including how to report fiduciary responsibility violations.
SPD vs. Plan Documents
Plan documents and summary plan descriptions serve distinct but equally important roles. Plan documents are highly technical guides for the plan’s administrator to use when implementing or operating the plan. They precisely explain the plan’s structure, operational rules, and legal responsibilities.
SPDs are simpler, shorter versions of those plan documents. They distill the plan’s intricate features, functions, and requirements into simple overviews easily understood by participants and beneficiaries.
| Plan Document | Summary Plan Description | |
| Purpose | Technical blueprint of the plan and its operational rules | Simple explanation of plan features and benefits |
| Audience | Plan administrators | Plan participants and beneficiaries |
| Content | Detailed legal and administrative requirements | Plain language overview of processes, rights, and important details |
| Distribution | Not typically shared with workers | Freely provided to participants |
Summary of Plan Description Distribution Requirements
Employers must follow Department of Labor (DOL) distribution guidelines when providing a plan summary description for health insurance or retirement savings:
| Who |
Plan participants and beneficiaries, including:
|
| When |
|
| How |
|
*Provided the electronic version is identical to the printed one, employers notify recipients about the electronic version and their right to request a paper copy.
Plan Amendments
If a plan amendment reduces or significantly changes participant coverage, plan administrators must distribute an updated SPD (or SMM) within 60 days.
If, however, the changes don’t impact coverages, an updated SPD (or SMM) only needs to go out within 210 days after the plan year when the change went into effect ends.
Plan Summary Description Noncompliance Penalties
Participants and beneficiaries have the right to request, in writing, a printed copy of the summary plan description. If employers don’t or can’t fulfill that request within 30 days, the Department of Labor can impose financial penalties for each day thereafter the request goes unfulfilled.
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