What is the primary purpose of a Summary Plan Description (SPD)?

The primary purpose of a Summary Plan Description (SPD) is to provide plan participants with important information about how their benefit plans work, including details on eligibility, coverage, and the funding mechanisms of the plan. The SPD serves as a concise resource that explains the rights and responsibilities of both the employer and the employee regarding the plan. It is mandated by the Employee Retirement Income Security Act (ERISA) to ensure that employees have access to clear and comprehensive information about their benefits.

By including details about funding and eligibility requirements, the SPD helps employees understand who qualifies for benefits, the criteria for participation, and how the benefits are financed. This transparency is essential for employees to make informed decisions regarding their retirement and benefits options.