SPD (Summary Plan Description)

A document provided by the 401k plan administrator that includes a plain language description of important features of the plan, e.g., when employees begin to participate in the plan, how service and benefits are calculated, when benefits become vested, when payment is received and in what form, and how to file a claim for benefits. Participants must be informed of material changes either through a revised Summary Plan Description or in a separate document called a Summary of Material Modifications.

The Employee Retirement Income Security Act (ERISA) requires plan administrators to give to participants and beneficiaries a Summary Plan Description (SPD) describing their rights, benefits, and responsibilities under the plan in understandable language. The SPD includes such information as:

Name and type of plan

Plan’s requirements regarding eligibility

Description of benefits and when participants have a right to those benefits

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

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.

New employees must receive a copy of their plan sponsor’s latest Summary Plan Description within 90 days after becoming covered by the plan; all employees should automatically get an updated copy every 10 years (5 years if the plan has been amended). Plan sponsors are not required to file the Summary Plan Description with the Department of Labor (DOL), although they are required to provide it to DOL upon request.

In addition to the Summary Plan Description, plan participants are entitled to receive a Summary of Material Modifications when there is a material modification in the terms of the plan or any change to the information in the Summary Plan Description. The Summary of Material Modifications must be written in a manner that the average participant can understand. The material must be furnished within 210 days after the close of the plan year in which the modification was made.