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SPD Distribution Deadlines
Penalties for Not Having A Written Plan Document/SPD
Response Penalty
The SPD must be furnished in response to a participant's or beneficiary’s written request. The plan administrator may be charged up to $110 per day if it does not provide the SPD within 30 days after an individual's request. These penalties may apply even where an SPD does not exist.
DOL Audits
The DOL has broad authority to investigate or audit an employee benefit plan’s compliance with the ERISA. Traditionally, DOL audits of employee benefit plans have focused primarily on retirement plans, such as 401(k) plans.
Benefit Lawsuits
Not having a plan document or SPD may put an employer at a disadvantage in the event a participant brings a lawsuit for benefits under the plan. Without these documents, it will be difficult for a plan administrator to prove that the plan’s terms support benefit decisions.
Frequently Asked Questions
Links and Resources
- Department of Labor (DOL) final SPD regulations from Nov. 21, 2000
- DOL’s Reporting and Disclosure Guide for Employee Benefit Plans
OTHER INFORMATION
Does the certificate or booklet prepared by an insurer qualify as an SPD?
Some plan sponsors mistakenly believe that providing participants with the booklet (or certificate) issued by the insurance company fulfills their obligation to provide participants with an SPD. The insurance booklet will often contain detailed information regarding plan benefits and coverage. However, in many cases, the plan sponsor will need to provide additional information that is not contained within the insurance booklet in order to comply with the SPD content requirements.
Is it Possible to combine the plan document and SPD into one document?
Many ERISA welfare benefit plans only have one document, which serves as the plan document and is also distributed to plan participants as the SPD. When one document is used, it must comply with ERISA’s content requirements for plan documents and SPDs, and it must be written in a manner that is understandable to plan participants. Also, the document should prominently state that it is intended to serve as both the plan document and the SPD.
Continued: Is it Possible to combine the plan document and SPD into one document?
For insured plans, the combined plan document/SPD is typically a wrap plan document. The wrap plan document addresses the ERISA content requirements that are missing from the insurance certificate and booklet. The wrap plan document and the insurance certificate, together, comprise the plan document/SPD for the plan. Also, when an employer decides to bundle two or more welfare benefits under one plan, a “mega” wrap plan document/SPD can be used to describe the benefits.