What Is a Summary Plan Description?

As a financial advisor, it’s your job to understand the financial needs of your clients. One of the most important documents associated with a new retirement plan is the Summary Plan Description (SPD). Review of this document can help provide insight into whether the current plan works for the client or what changes will encompass all the features and coverages they seek. Read on for more information on what you can learn from an SPD.

Key Takeaways:

• An SPD details important information about your clients’ plans.
• Make sure your clients understand the importance of a Summary Plan Description and what is detailed within it.
• All employers must provide a copy of the SPD to their employees (plan participants).

What is detailed in the SPD?

ERISA requires retirement plan participants as well as beneficiaries receiving benefits to receive a copy of the Summary Plan Description, (SPD). This document details the rights, benefits, and responsibilities of the plan. The SPD includes the following information and more:

• Plan name and type
• Plan eligibility requirements
• Explanation of benefits and participant rights to benefits
• Information about sources of plan contributions and any calculation methods
• Rules regarding termination of the plan
• Explanation of claims benefits and procedures for denied claims
• Statement of plan participant rights under ERISA

By reviewing your client’s current SPD, you can help them to benchmark their plan and determine if it is bringing them the features and value they seek based on the information provided. If not, you may even be able to bring them over to an ePlan Services 401(k) plan. Our 401(k) plans come complete with all plan documents your clients will need including an SPD which is split into two documents, one that functions as a static SPD, and another that highlights plan-specific details, that can be printed from the system, taking the burden off your clients’ shoulders.

Why is an SPD important?

An SPD is vital for employers sponsoring a retirement plan because proper distribution helps to keep them legally protected. Without a clearly detailed SPD or even worse, no SPD at all, your clients may risk potential lawsuits.

You can help them mitigate any potential legal issues and display your expertise by recommending they work with a knowledgeable attorney regarding plan documents. An experienced attorney can help your clients ensure that their documents are properly detailed. It’s also important to note that plan provisions may change over time and if this happens, your clients’ plan participants and beneficiaries must be given revised SPDs.

What are the plan admin’s responsibilities regarding the SPD?

Your clients’ plan administrators are required to provide an SPD to all plan participants and beneficiaries receiving benefits. However, they do not have to provide a copy to the Department of Labor (DOL). Nevertheless, they must still provide a copy of the SPD to the DOL upon request.

Conclusion: 

A Summary Plan Description is one of the most important documents associated with your client’s employer-sponsored retirement plan. With it, they can easily track plan information, benefits, participant rights, and claims procedures. ePlan Services makes this process a breeze so your clients and their plan administrators can relax.

If your clients aren’t familiar with or haven’t had the time to review their SPD document, consult with them to ensure that their plan not only follows ERISA guidelines, but also provides the best features and benefits for their businesses.