DISTRIBUTION

Distribution of an SPD, or Summary Plan Description, must be made to all participants covered by the welfare or pension plan in question. The SPD can either be combined with the Plan document, or can act as a stand-alone document. For fully insured plans, the usual practice is to incorporate the Certificate of coverage that was issued by the Insurer, via reference.

Within 90 days of a participant becoming covered by a plan, an SPD must be distributed. If it is a new plan subject to ERISA, then the SPD must be provided within 120 days of the plan being adopted. If the plan is amended or changed in any way, a modified SPD must be provided to each participant every 5 years. If the plan is not altered, then a new SPD must be provided every 10 years.

Distributing an SPD requires more than just making it available to participants. The DOL has indicated that simply advising participants that the document in question is available in a common area of a workplace, can be a deterrent for participants to attain and review the important plan information, thus, it does not ensure delivery. Placing the SPD in a common area or break room does not meet the regulations for SPD distribution. The SPD must be distributed in a manner that guarantees delivery to each participant. An accepted method is providing printed copies via first class mail to the employee’s home address, or via internal company mail. The SPD can also be distributed electronically so long as it is compliant with the specific guidelines.

For the most part, there are two groups that can receive information electronically; one being the employees/participants with work related computer access, and the other being those without, but have provided consent to having information sent to them electronically. All other participants or beneficiaries are subject to alternative methods of distribution such as printed documents.

In order for electronic transmission to be permitted, the employee/participant must be able to effectively access electronic documents at any location where they are reasonably expected to perform their job duties, and where access to the company’s electronic information system, e-mail, is an integral part of said duties. This is applicable to employees who telecommute, as long as they are able to access the company’s information delivery system. An example of this is accessing the information via a VPN.

The system used to provide the document must result in actual receipt of the transmission. Using a return receipt or non-delivery receipts is an acceptable method to ensure this. Some form of delivery confirmation is necessary to adhere to the rules of SPD distribution. If the electronic transmission is not successful, or if mail is returned as undeliverable, an alternative method must be used, such as a paper copy sent via mail.

It is also necessary to inform employees/participants about the significance of the document being provided if it is not obvious from the transmittal. This can be done in either writing or electronically. They should also be informed that they have the right to request and obtain a printed copy of the document.

Lastly, the document must adhere to ERISA style, format, and content requirements. If the information is being made available via a company website, the employer must send a paper or electronic notice directing employees to the website. This notice can alternatively include a link to the company’s website home page.

Instead of attaching the actual document, a hyperlink to an internal or external website is permissible. The individual must be able to access the link within the scope of their job duties and the electronic version of the document does not change the information contained in the paper version.

Documents can be electronically distribution to employees in a non-work-site location so long as the employee has affirmatively consented to being provided documents electronically. Additionally this can be extended to employees without computer access, COBRA beneficiaries, retirees, QDRO alternate payees, or any other person who is required to receive a document. The electronic consent must clearly explain the following items
1. The types of documents that is being provided electronically
2. The individual has the right to withdraw consent at any time without penalty
3. The necessary procedures for withdrawing consent or updating information
4. The software or hardware required to access and retain electronic information

Again the document must adhere to ERISA’s style, format, and content requirements. The employees must still be notified of the significance of the provided documents, via writing or electronically, if it is not evident. Employees must be informed of their right to request a printed copy of the document.

Finally the electronic delivery must provide proof of receipt such as a return-receipt or notice of undeliverable mail. This may prove difficult for employers if the external e-mail system isn’t compatible or cannot track receipts for individual e-mail addresses.

Yes, in addition to printed copies of the SPD, employers can use CDs or DVDs to provide the SPD. Consent of the participant is not necessary if the CD or DVD method is used. Whatever the method chosen, the SPD timing and recordkeeping requirements established by ERISA must be adhered to.

During litigation or audits, receipt of the SPD by a participant can become a crucial issue. Employers are advised to be prepared to provide documentation that the SPD was provided in a way “reasonably calculated to ensure actual receipt”. To confirm that necessary steps were taken to effectively distribute the SPD within the required time frame, mailing lists (internal, external, or electronic) should be maintained.

Simply posting an SPD on the intranet does not guarantee receipt by all participants, so that method is not sufficient. Please review the Distribution Summary here in the Knowledge base to assess the specific rules and guidelines for distribution of the SPD to participants.

Yes there is a time frame for distribution of SMM. The SMMs must be distribution to participants:

1. Within 210 days after end of plan year in which amendment was adopted
2. Within 60 days after the date the change was adopted if the change may be classified as a reduction in benefits to the average participant
3. Material reductions in plan benefits made mid-year must be provided 60 days prior to the effective date of the change.