The Employee Retirement Income Security Act (ERISA), the federal law that governs private pension, group life, and health plans, demands that strategy participants acquire a document called a summary strategy description ("SPD"). Despite the fact that the SPD should be drafted in accordance with two Division of Labor regulations, it does not have to be referred to as "The Summary Strategy Description."


What's Covered in the Summary Plan Description?



The SPD is a detailed document that informs strategy participants about how the plan operates and is managed. Amongst other factors, the SPD will have to clearly determine in effortlessly understood language the following products:



A description or summary of the benefits

The program name, sponsor, and administrator

Funding mechanisms

Participation and qualification recommendations

Calculation procedures for service and benefits

Advantage vesting schedules

Benefit payment procedures and timing

Claims submission process

Claims appeal process

Address for service of legal process

Circumstances that could result in ineligibility or perhaps a denial of benefits

A statement of participants' ERISA rights along with other technical notices



Inquiries that a participant could possibly nonetheless have concerning the plan soon after reading the SPD could be answered by contacting the program administrator.



When Must a Summary Plan Description be Offered?



Every strategy administrator have to offer a copy of your SPD to participants in the following situations:



When a new strategy requires effect

When an employee becomes eligible to take part in a strategy

Upon written request of a strategy participant or beneficiary



Are There Any Exceptions for the Summary Program Description?



Employer-provided daycare and welfare plans for management and extremely compensated employees are exempt from the SPD requirement. You can find no exemptions from the SPD requirement for tiny plans covering fewer than 100 participants.



How Frequently Will have to a Summary Program Description be Updated?



If a strategy is amended or modified inside a 5 year period, a brand new SPD should be distributed to participants. If there's no change, the original SPD have to be distributed to strategy participants every ten years.



A "summary of material modifications" may well also be used to notify strategy participants of a substantial program adjust.



What Are Typical SPD Errors that could Outcome in ERISA Litigation?



Administration errors or disputes that might outcome in ERISA litigation contain but will not be limited to:



Failure to follow the procedures described within the SPD

Conflicts between the SPD and any underlying program document which it describes or summarizes

Failure to clearly disclose situations that may well outcome in benefits reduction, forfeitures, or exclusions

Failure to supply program documents within a timely manner



All round, ERISA delivers clearly proscribed procedures that has to be closely followed by program sponsors and administrators. Concerns about ERISA compliance should really be directed to an lawyer experienced in ERISA matters.