Go beyond a basic 401(k)

Go beyond a basic 401(k)

Give your employees more than just a 401(k), join the movement.

5 min read

401(k) Summary Plan Description: Basics, Requirements, and Compliance

Evan Ross
August 16, 2018
401(k) Summary Plan Description: Basics, Requirements, and Compliance
Table of contents

What is the 401(k) Summary Plan Description (SPD)?

The Summary Plan Description (SPD) is one of the important 401(k) plan documents that provides plan participants (and their beneficiaries) with the most important details of their benefit plan, like eligibility requirements or participation dates, benefit calculations, plan management instructions, and general member responsibilities.

That’s the basic definition, but there’s a lot more that you need to know about the SPD for successful benefits administration. We’ve covered it all below:

Jump to:

  • What’s required in the SPD?
  • Reporting Changes to the Retirement Plan
  • SPD Distribution Schedule
  • ERISA Compliance and Fees
  • The SPD from the Participant’s Perspective

The 401(k) SPD in More Detail:

The SPD is one of the most important documents associated with your retirement benefit plan. As a summary of the adoption agreement or plan document for your plan, the SPD must contain all the information relevant to plan participants.

From the plan participant’s perspective, the 401(k) Summary Plan Document is the go-to document for quick, yet thorough and descriptive information about their 401(k) benefit plan. Almost all basic questions an employee might have about the function and management of their plan should be answered in the SPD – in plain, non-technical language.

Note: The SPD is not to be confused with the Summary Annual Report, or SAR. Though they are both required by ERISA to be distributed to all 401(k) plan participants, the SAR The is a summary of the IRS Form 5500, not the 401(k) Plan Document or Adoption Agreement.

Here is some of the most important required information in a 401(k) SPD:

Information Required in a 401(k) SPD:

  • A brief description of the plan type and citations of the associated governing law.
  • Explanation of how the plan will be administered, including the yearly schedule for the plan (such as document distribution dates or filing deadlines), and the contact information of the plan administrator or sponsors.
  • Information on where to find full copies of 401(k) plan documents.
  • Eligibility and participation rules (or dates).
  • How to file documents relating to use or management of the 401(k).
  • How to appeal a denial of benefits.
  • Benefit calculations and situations resulting in loss of benefits, including disability, death, or termination of employment.  
  • Profit-sharing rules and information
  • Changes to 401(k) benefits, the rules, or the funding requirements.
  • Tax considerations related to the distribution of benefits.
  • Member responsibilities for their retirement benefit plan.
  • 401(k) plan contribution sources and the methods used to calculate contributions.
  • An explanation of withdrawals and loans and any rules related to these.
  • When and in what form retirement benefits are paid.
  • When retirement benefits become vested.
  • Where to find employee plan benefit details like 401(k) account balance.
  • Alternative investment options and fees for defined contribution plans detailed in the plan provisions.
  • Information on plan fiduciaries and their roles/responsibilities.
  • Information on plan flexibility options like rollover contributions.
  • A disclaimer that should there be any conflict in plan details, the plan document is always the prevailing document.
  • Statement of rights available to 401(k) plan participants under ERISA.

The SPD for a 401(k) retirement plan is generally between 10-20 pages, though this will vary depending on your plan and business.

Want the full (and we mean full) list of SPD requirements? Check out the Department of Labor’s full list of Summary Plan Description Requirements.

Alterations, Amendments, and Changes to the SPD

The SPD is created to match the 401(k) Plan Document (or Adoption Agreement), and should always reflect the most recent version of the retirement plan that is put into practice. If any amendments are made to the plan, ERISA requires that the participants are duly notified. To accomplish this, 401(k) plan administrators have two options: to distribute a new SPD, or to hand out a Summary of Material Modifications.

A new 401(k) SPD is pretty straightforward, after all, we just went over details of SPDs, so let’s briefly touch on SMMs:

The Summary of Material Modifications (SMM) is a short document specifically for reporting any change in the plan that materially affects the plan design or pricing or impacts the participant. SMMs can be attached to the current 401(k) SPD as a sort of amendment or addendum, rather than requiring the creation and distribution of whole new SPD.

Distribution of the SPD

Employee Retirement Income Security Act (ERISA) mandates that employees receive timely and reasonable information about their retirement benefits. The Department of Labor (DoL) takes this seriously, and may fine retirement plans that fail to comply with the deadlines for distribution that they have laid out. Reports of unreceived SPDs or SMMS are red flags that can bring a DoL auditor to your door.

It won’t surprise you that the creation and distribution of 401(k) benefit plan information must adhere to a relatively strict schedule for reporting, which we’ve detailed below:

## **Summary Plan Description Distribution Schedule**
**Initial Notice****Requested SPD****Change to the Plan**
**SPD -The Summary Plan Description**The SPD must be sent to the participant and their beneficiaries within 90 days of enrollment in retirement benefit plan.The SPD must be furnished to the requester within 30 days of a request for a new copy. SPD’s or SMMs must be distributed to 401(k) plan participants and beneficiaries within 120 days of the effective date for the new plan.

Can The SPD be Distributed Electronically?

Yes! In general, retirement plan documents that ERISA requires you to provide to plan members can be distributed electronically – including the 401(k) SPD. This does come with a few caveats, most of which will be almost automatically covered if you’ve chosen a standard delivery system like email:

  1. The plan administrator has to ensure (to a reasonable degree) that the system of distribution will result in plan members actually receiving the 401(k) plan materials.
  2. The plan administrator must make sure that the system of distribution adequately protects the participant’s account and retirement benefit information.
  3. The electronic documents should meet the same requirements for style, format, and content as any physical plan documents.
  4. If not otherwise evident, the significance of the electronic plan document must be communicated to participants and beneficiaries.
  5. Participants, beneficiaries, or other individuals must be provided with a physical copy of the retirement plan document upon request.

The SPD should be available in the office at any time and online (on a team site or employee benefits platform – if applicable). To make sure you don’t face any unexpected compliance issues, be certain that whenever changes or amendments are made to the retirement plan, those changes are reflected in the SPD (or added in an SMM) across all platforms and distribution channels.

ERISA Compliance and Fees

You likely know that ERISA was put in place largely to protect employees and their retirement benefit plan interests. Because of this, federal law mandates both the creation and timely distribution of important benefit plan documents. Failing to furnish those 401(k) documents in a reasonable timeframe is treated seriously, and some hefty fines could be incurred as a result.

Fee increases in 2016 (to adjust for inflation) mean that you may be paying more than you expected. Failure to provide the 401(k) plan documents (which includes the summary plan description and any summaries of material modification) can result in fees of $147/day – with a maximum of $1,472 per request.

In addition to these fees, problems like missing SPDs or SMMs are significant red flags and could bring about a U.S. Department of Labor 401(k) audit. Careful management of any benefit plan is critical for avoiding the stresses and fines associated with a DoL audit. In this instance, that begins with ensuring your SPD is descriptive and accurate, and correctly following the SPD distribution and modification schedule.

Without a fiduciary, any compliance issues are the financial responsibility of the plan administrator or plan trustees.

What’s the most important thing about the SPD for employees?

Normally the SPD is one of those “hiring paperwork” packets that gets skimmed and tucked (or thrown) away and pretty much never looked at until a moment of “wait, whoops, what were the terms of my 401(k)…”

The SPD is a document employees should thoroughly familiarize themselves with. For employees to make the most of their benefits, they need to understand the details of those benefits.  The SPD will tell them everything they need to know about their 401(k) plan.

Here some of the most important and useful details found in the SPD:

  • When employees are eligible to participate in the retirement plan.
  • Employee contribution rates and how they are calculated.
  • How to apply for hardship withdrawals and interest rate calculations for loans.
  • Withdrawal procedures at retirement.
  • Employee rights as specified in the Employee Retirement Income Security Act (ERISA).
  • Contact information for the plan sponsor, administrator, and plan trustees.
  • Plan Identification Number (used for reviewing filings with the DoL or IRS).
  • Employer-matching contribution vesting schedules.
  • How to file a suit and who to contact if 401(k) plan rules are broken.


The SPD is just one of the many documents to juggle in the everyday management of your employee retirement benefits, but it is an important one. Incorrectly distributing or updating your SPD can mean major fines, but it’s not all about avoiding a fine. Successful SPD coordination can mean employees who are informed, educated, and excited about their retirement benefits. What business doesn’t want that?

Go beyond a basic 401(k)
Give your employees more than just a 401(k), join the movement.
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Evan Ross
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1 Schwab 2022 401(k) Participant Study - Gen Z/Millenial Focus, October 2022.
2 As of 12/31/2022. Employees include both current employees and terminated participants with a balance.
3 "Morgan Stanley At Work: The Value of a Financial Advisor" Morgan Stanley, March 2022.
4 Sarah Britton was a client when she provided this testimonial through an independent third party review website. She received no compensation for her remarks. There are no known conflicts of interest in the provision of her comments related to the services provided.