Definition
A summary plan description is the participant-facing document that explains a retirement plan's terms in language calculated to be understood by the average participant, required by the Employee Retirement Income Security Act to be furnished to every participant and beneficiary.
Why it matters
The summary plan description is how most participants actually learn what their retirement plan does. It is the plan's principal communication instrument to the participant population, and the required content — how the plan works, what participants must do to receive benefits, what claim and appeal procedures apply — establishes a floor on what participants are entitled to know about the arrangement they are covered by.
How it works
A summary plan description is required by ERISA Section 102 for every ERISA-covered employee benefit plan. Content requirements are specified by Department of Labor regulation and include the plan name, sponsor and administrator identification, eligibility requirements, benefit calculation and distribution rules, vesting schedule, claim and appeal procedures, statement of ERISA rights, and identification of the plan's funding and administration arrangements. The document is required to be written in a manner calculated to be understood by the average plan participant and to be furnished to each participant and beneficiary within specified time frames — generally within 90 days of a participant's first becoming covered and within 210 days after the end of the plan year in which any material modification is adopted. If the summary plan description differs from the plan document, the plan document controls as a legal matter, though courts have in some cases held that participants may rely on summary plan description terms when the participant's reliance is reasonable.
In practice
If you are covered by a retirement plan, the summary plan description is the document you are most likely to receive, keep, and reference for basic questions about the plan — how much you can contribute, when you become vested, what distribution options you have, how to file a claim if you believe you are entitled to a benefit. When you have a specific operational question — what happens at job change, how a distribution option works, what a hardship withdrawal requires — the summary plan description is the accessible starting point, and the plan document is available on request when the summary plan description does not fully resolve the question. A participant preparing to evaluate a lifetime income option offered inside the plan should confirm the option is described in the summary plan description, request the plan document if fuller specification is needed, and ask the plan administrator directly if the terms remain unclear.
Related terms
- Plan document
- Employee Retirement Income Security Act
- Plan administrator
- Lifetime income disclosure requirement
- Participant fee disclosure
- ERISA Section 102
- Claim procedure
- Material modification