What does a Summary of Material Modification (SMM) need to explain?

A Summary of Material Modification (SMM) is a document required under the Employee Retirement Income Security Act (ERISA) that informs plan participants about significant changes to their benefits plan. The primary purpose of the SMM is to communicate substantive changes made to the Summary Plan Description (SPD) that occurred within the past year.

When an employer makes important updates to its benefits plan — such as altering coverage options, changing eligibility requirements, or modifying significant plan provisions — these changes must be formally disclosed to participants in an SMM to keep them informed and ensure they understand how these modifications may affect their benefits. This transparency is vital for compliance under ERISA and helps participants make informed decisions about their benefits.

While changes in employee contributions could be addressed in an SMM if they are significant and relevant, the main focus of an SMM is to detail substantive alterations to the plan rather than just contribution changes alone. Future funding projections and new employee recruitment strategies do not belong in an SMM, as they do not directly relate to participants’ rights or benefit provisions under the plan. Thus, the emphasis on the necessity for the SMM to explain substantive changes to the SPD within the past year directly supports its purpose of keeping employees accurately informed.