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What is a Summary Plan Description?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 18 October 2018
  • Copyright Protected:
    2003-2018
    Conjecture Corporation
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Also known as SPD, a summary plan description is a type of document that is often prepared to offer a brief but comprehensive overview of some type of financial plan or program. The term is often associated with the document prepared to provide a summary of some sort of retirement plan, although SPD may also be used to describe summaries related to trusts and different types of insurance plans. In all its uses, the goal of the summary plan description is to provide potential participants with data that is essential for consideration before actually enrolling in the plan.

With a summary plan description, the goal is to provide potential plan members with the data needed to make an informed decision regarding their participation. To that end, the format of the plan description normally includes a breakdown of the benefits generated by the plan, as well as the terms and conditions that apply to membership in the plan. This includes an overview of the rights, privileges, and responsibilities that the new member assumes as part of the membership. At the same time, the summary plan breakdown will also include key information on the rights, privileges, and responsibilities of the plan provider.

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The preparation of a summary plan description is often for the purpose of providing potential plan members with enough information to determine if they want to explore the plan and its opportunities in more detail. From this perspective, this document is helpful in narrowing the focus to only those potential members who see some value in associated with the plan. For example, if a potential member reads through a summary plan description and feels that the product is not in line with the individual’s needs, it is possible to discontinue the discussion and move on to other plans that may be more to his or her liking.

In some nations, there are regulations that help to govern what type of information goes into a summary plan description. All data must be factual and easily corroborated by the text of the terms and conditions associated with the plan. Even in nations where the content of the document are not regulated by some type of government agency, many companies offering different types of insurance or retirement plans will employ industry standards that are in common use within that culture. This makes it relatively easy for consumers to compare and contrast the merits of different financial plans and determine which plan or plans are best for their individual situations.

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