Summary Plan Description-Poorly Written

[Guest dsw713]

A retirement plan SPD is supposed to be written for the average participant (rule of them is w/a 8th or 9th grade level education). That being said, many recordkeepers, have subscribed to a major plan document provider service, who is issuing SPDs that are so incomprehensible, confusing, and conflicting, we as the Plan Sponsor, just can't issue to the participants. Any suggestions on how I can get or create an easily readible SPD? We are thinking of asking for a reduction in our fee from the recordkeeper and hiring a vendor who specialized in this to write it for us. I've tried reaching out to the document provider, but they have not responded as of yet.

[QDROphile]

Kudos to you for appropriate fiduciary concerns and caring in general. Sympathies, too. I am not optimistic that you will get much relief from the sources. For what it is worth, some courts have observed that it is nigh impossible to achieve both (i) complete and accurate description, and (ii) easy comprehension, of complex plan arrangements. But don't let that distract you from your quest.

[GMK]

Bravo for not issuing a computer-generated SPD that doesn't give straight answers. The sentence that boils my blood is the one that goes, "If the Plan provides ..., then ..." Yikes, if the SPD can't state whether or not the plan provides something, it's a bit of a stretch to assume that the participant can figure it out. And besides, if the SPD makes it clear, then it's that much easier for me to explain the why's and wherefore's.

One option is to have your ERISA attorney write an SPD for your plan. Costly, yes, but probably way better than what you're getting now.

As 401king suggests, another approach is to write or edit the SPD yourself (or hire someone), assuming you understand your plan well enough. Then, have the attorney review it to ensure that the statements are correct and that all the things that should be in an SPD are in it.

[Belgarath]

Some of the problem depends upon the plan size. A small plan with 10 participants is likely to have a hard time affording what a good ERISA attorney will charge to do a SPD that is, as oberved earlier, accurate, complete, and readable. A plan with several hundred or more participants can spread this cost out much more reasonably.

Major document providers tend to err on the side of covering every possible legal technicality, which of course doesn't make for a very readable SPD. In their defense, I'm not sure I can blame them. One lawsuit can put an awful hole in your bottom line.

I'm not sanguine that this is going to get better any time soon.