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Understanding the Basics of Summary Plan Descriptions


According to the Employee Retirement Income Security Act (ERISA), employers that offer qualified group health and retirement plans must establish and maintain a written instrument providing basic information about the plan. This written instrument is called a “plan document.”

Plan documents generally are written in legal terms, which the average participant may find difficult to comprehend. Consequently, employers must provide participants with a simplified version of the plan document—called the Summary Plan Description, or SPD. Material changes are communicated to participants through a separate document called a Summary of Material Modifications, or SMM.

Required Content

ERISA is specific about the content that must be stated in an SPD, which includes the following:

  • Plan name and type
  • Benefits offered under the plan
  • Eligibility requirements, such as who can contribute to the plan and when
  • Methods for calculating contributions to the plan
  • How and when benefits are paid
  • Vesting of benefits
  • Process for submitting a claim for benefits
  • Steps for disputing denied claims
  • Provisions regarding termination of the plan and modification or elimination of benefits
  • Statement of participants’ rights under ERISA

Style and Format

The SPD must be written in the style and format mandated by ERISA. For example, the document should be presented in language that the average plan participant can understand. This requires considering the comprehension and education level of participants and eliminating jargon and complex sentences. The SPD data should not be misleading and the document must inform participants of relevant information.


The document must be delivered according to following requirements:

  • Within 30 days, if a participant or the Department of Labor submits a written request for the SPD, the employer must deliver the document.
  • Within 90 days, plan participants must receive an SPD of becoming covered by the plan.
  • Within 120 days, plan participants must receive an SPD when a new plan is established.
  • No later than 210 days after the end of the plan year in which material changes were made, an SMM must be delivered.
  • Every 5 years, if the plan undergoes material changes, an updated SPD must be provided to participants.
  • Every 10 years, even if no material changes are made to the plan, participants must receive an updated SPD.

Whenever changes are adopted, the plan administrator must determine whether an SPD or an SMM should be used to communicate the change. SPDs can be delivered by hand, sent via first-class mail, or transmitted electronically provided the Department of Labor’s regulations for electronic distributions of ERISA disclosures are met. An employer can face penalties for failing to deliver the SPD as requested.

The plan administrator is legally responsible for distributing the SPD to participants free of charge. This is true, even if an outsourced party assisted in the crafting of the SPD. Often, the employer that sponsors the plan is the plan administrator. For assistance preparing and delivering your company’s SPD, contact us today.

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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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