Text Box: Summary Plan Description   What is a Summary Plan Description (“SPD”):   A summary plan description explains the features and limitations of the plan as well as the participants’ rights under the plan. The SPD must be written in a style and format that are understandable to the average participant.   When to Distribute the SPD:   ERISA requires an SPD to be distributed to each plan participant and to each beneficiary receiving benefits under the plan within a fixed period of time. For existing plans, a new participant must receive a copy of the SPD within 90 days after becoming a participant, and a beneficiary must receive a copy within 90 days after first receiving benefits. For newly created plans, an SPD must be distributed to participants and beneficiaries within 120 days after the plan is first instituted.   The diligent plan administrator's work does not end with the initial SPD distribution. During the operation of the Plan, participants and beneficiaries must be provided with an updated SPD that reflects relevant information changes. The updated SPD must be distributed to participants and beneficiaries within 210 days following the close of the plan year in which the changes were adopted. As an alternative, plan administrators may distribute an amendment to the SPD known as a “Summary of Material Modification” within the same time period. In any case, participants must receive a revised SPD at least every five years integrating all modifications to the plan within the five-year period.   How to Distribute the SPD:   The Department of Labor ("DOL") has primary jurisdiction over ERISA's reporting and disclosure provisions. In distributing SPDs, DOL Regulation requires plan administrators to "use measures reasonably calculated to ensure actual receipt of the material by plan participants and beneficiaries." This section provides for several delivery methods that will satisfy this requirement. Hand delivery to an employee at the work place is acceptable, as is first-class mail. Mail may also be sent second or third-class, but only if return and forwarding postage is guaranteed and address correction is requested. Any material sent by second or third-class mail which is returned with an address correction must be re-sent via first-class mail or hand delivered. It is never acceptable to merely place copies of the material in a location frequented by participants.   In addition, delivery of SPDs and other plan information may be possible via electronic media such as e-mail. Electronic delivery entails compliance with several specific requirements. Current DOL requirements should be checked before proceeding.   Special Requirements if Participants do not speak English:   Under the DOL Reg 2520.102-2(c), if a significant number of participants are literate only in the same non-English language, the plan administrator must attach a notice to the English-language SPD. This notice, written in the non-English language common to these participants, must offer assistance to participants in their own language. The assistance offered must include the name of a contact at the office of the plan administrator. This requirement is applicable in the following situations:   1. If the plan covers fewer than 100 participants and at least 25 percent of all plan participants are literate only in the same non-English language, or 2. If the plan covers 100 or more participants and the lesser of:   a. 500 or more participants, or b. 10 percent or more of all plan participants are literate only in the same non-English language.   Penalty for Failure to Distribute the SPD:   Per ERISA, plan sponsors may be charged $110 per day for a failure to provide an SPD within 30 days of an individual's written request. If the SPD was never initially distributed as required, penalties may also apply for failure to distribute the SPD.

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Text Box: The following article contains general plan facts and is intended for informational purposes only.  To ensure that your plan contains specific provisions outlined in this and future articles, please contact your third party administrator or plan ERISA attorney.