Failure to Maintain a Summary Plan Description Can Cost Your Company $110 Per Day


The Employee Retirement Income Security Act (ERISA) requires that every employee benefit plan be established and maintained pursuant to a “written instrument.” The actual documents required under ERISA, a federal law, are referred to as a Plan Document and Summary Plan Description (SPD).

Many businesses have SPDs for their 401k or pension plan. However many businesses don’t have an SPD for their health insurance and employee benefit programs. Most businesses think that the information that the insurance carrier provides, like the booklets and/or certificates of coverage, satisfy the SPD requirement.


The information sent by the insurance company doesn’t contain certain language that is required under ERISA.
Every employer with a retirement plan, health insurance, or employee benefit needs to have a SPD to be in compliance with ERISA – and now PPACA (health care reform). If you don’t have a SPD, or have one that’s several years old, you may find yourself to be out of compliance if your plan is audited by the Department of Labor.

Failure to provide a plan participant with an SPD within 30 days of an employee request carries a maximum $110 per day penalty. Individuals or companies that willfully violate any ERISA disclosure requirement (e.g., plan document, SPD, SMM or SAR) may be subject to criminal penalties; the penalty per conviction could be $100,000 and/or imprisonment for up to 10 years (company penalties may be as high as $500,000). The plan administrator is also potentially liable for $110 per day penalties if they do not respond to a request from a participant or beneficiary for a copy of a required document.

While ERISA has always required that businesses have SPDs, it was not until a few years ago that the Department of Labor and IRS issued regulations stressing the importance of maintaining a written plan document. In 2011, the DOL added literally hundreds of new agents to audit benefit plans, and has stepped up audit activity.

To ensure compliance and minimize audit risk, now is time to update your SPD and employee benefit plans to be in compliance with Federal and State Laws.

For information on how we can help you to comply with this and other regulations, please contact us via the form below.