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February 16, 2009

Summary plan description

Your Guide

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Definition

A document that must be provided to participants of qualified pans; providing explanations of their rights, benefits, and responsibilities under the plan.  SPDs must be written in a language that is easily understood by average plan participants. For instance, if the majority of employees of the firm are educated up to high school (or below), the SPD cannot be written in legalese (highfalutin legal terminology).

The SPD is required to include the following information:

  • Name and type of plan

  • Plan’s requirements regarding eligibility

  • Description of benefits and when participants have a right to those benefits, such as vesting and when distributions can occur from the plan

  • Statement that the plan is maintained pursuant to a collective bargaining agreement, if applicable

  • Statement about whether the plan is covered by termination insurance from the Pension Benefit Guaranty Corporation (PBGC)

  • Source of contributions to the plan and the methods used to calculate the amount of contributions

  • Provisions governing termination of the plan

  • Procedures regarding claims for benefits and remedies for disputing denied claims

  • Statement of rights available to plan participants under ERISA

Plan sponsors must provide participants with a copy of the SPD within 90 days after the participant becomes eligible to participate in the plan.

The SPD is not required to be filed with the department of labor (DOL), but it must be provided to the DOL upon the DOL’s request.

The SPD must be provided free of charge to participants

Referring Cite

DOL Regs. 2520.102; 2520.104; ERISA

Additional Helpful Information

  • Education level consideration: In fulfilling the SPD requirements, the plan administrator is required exercise considered judgment and discretion by taking into account such factors as the level of comprehension and education of typical participants in the plan and the complexity of the terms of the plan. Consideration of these factors will usually require the limitation or elimination of technical jargon and of long, complex sentences, the use of clarifying examples and illustrations, the use of clear cross references and a table of contents
  • Non-English Language consideration: Special provisions must be made for non-English speaking employees under the following circumstances. A plan that covers fewer than 100 participants at the beginning of a plan year, and in which 25 percent or more of all plan participants are literate only in the same non-English language, orA plan which covers 100 or more participants at the beginning of the plan year, and in which the lesser of

    (i) 500 or more participants, or

    (ii) 10% or more of all plan participants are literate only in the same non-English language, so that a summary plan description in English would fail to inform these participants adequately of their rights and obligations under the plan, the plan administrator for such plan shall provide these participants with an English-language summary plan description which prominently displays a notice, in the non-English language common to these participants, offering them assistance. The assistance provided need not involve written materials, but shall be given in the non-English language common to these participants and shall be calculated to provide them with a reasonable opportunity to become informed as to their rights and obligations under the plan. The notice offering assistance contained in the summary plan description shall clearly set forth in the non-English language common to such participants offering them assistance. The assistance provided need not involve written materials, but shall be given in the non-English language common to these participants and shall be calculated to provide them with a reasonable opportunity to become informed as to their rights and obligations under the plan. The notice offering assistance contained in the summary plan description shall clearly set forth in the non-English language common to such participants the procedures they must follow in order to obtain such assistance. (29 CFR 2520.102-2)

  • If participants are unable to get the SPD from their plan administrators , they may be able to obtain a copy by writing to:

    U.S. Department of Labor
    EBSA Public Disclosure Room N-1513
    200 Constitution Avenue, NW
    Washington, DC 20210

Participants should include their name, address, and telephone number to assist the Employee Benefits and Security Administration in responding to their request.  There may be a nominal copying charge.

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

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