While considering year-end tasks and planning for the upcoming year, qualified plan sponsors should think about whether they need to revise and/or reissue their summary plan descriptions (SPDs) in 2022.

General Obligation to Provide an SPD

ERISA requires that a qualified plan sponsor provide to participants and beneficiaries an SPD containing a general description of the plan’s provisions, identifying plan information (e.g., the employer identification number (EIN) and plan number), a statement of participants' rights under ERISA, and other important disclosures.

When the information in the required disclosures changes and/or a plan sponsor materially modifies a plan, the plan sponsor must issue an updated SPD or deliver a summary of material modifications (SMM) describing the specific change.

In addition to satisfying ERISA's statutory disclosure obligations, an SPD or SMM is a convenient vehicle for a plan sponsor to communicate other plan terms and procedures that may help manage risk such as a statute of limitations for a participant to file a claim against the plan, arbitration and class-waiver provisions, choice of law and venue provisions, and cybersecurity best practices for participants.

Given this background, plan sponsors are well served by periodically updating and distributing SPDs.

Who Must Be Provided an SPD?

In general, SPDs must be provided to plan participants and, if applicable, beneficiaries who become eligible to receive plan benefits following a participant's death.

When Must a Plan Sponsor Distribute an SPD?

At the time of initial participation, a copy of the plan’s current SPD must be provided to each new employee within 90 days after he or she first participates in the plan, and to each beneficiary within 90 days after he or she first begins receiving plan benefits. Thereafter, ERISA generally requires that an updated SPD be furnished to each participant and each beneficiary receiving benefits under the plan approximately every five years (if the plan has been amended or changed during that five-year period) or every 10 years if the plan has not been amended or changed.

An updated SPD must generally be provided no later than 210 days after the end of the plan year in which the applicable five-year or 10-year period ends. This means, for example, that if a plan sponsor last distributed an SPD to participants in 2016, the plan was amended one or more times in the next five years, and the plan has a calendar year plan year, the plan sponsor would need to distribute an updated SPD by the end of July 2022.

There are special rules that apply to distributing SPDs to retirees and terminated vested participants and beneficiaries. And in some instances, it may not be necessary to distribute updated SPDs to these types of retirees and beneficiaries if plan changes do not affect their rights to plan benefits.

How May a Plan Sponsor Deliver an SPD?

The plan sponsor must distribute the SPD by use of measures that are reasonably calculated to ensure actual receipt by the intended recipient and that will be likely to result in full distribution.

Acceptable methods of delivery include the following:

  • Hand delivery of a hard copy at a worksite
  • Publishing in a company newsletter or publication that is distributed to employees
  • Mailing of a hard copy to a participant or beneficiary
  • Electronic delivery (Note: The Department of Labor has issued regulations that establish safe-harbors and other rules for delivery of SPDs and other required notices and disclosures through electronic means.)