How should an error in a summary plan description be corrected?


You have discovered an error in your summary plan description (SPD) from a prior plan year. What requirements does an employer have to follow to correct an error in the SPD if the benefits were paid as intended but not as stated in the benefit booklet?


The answer varies depending on the significance of the error. If there is a "material modification" of the plan, participants must be notified within 210 days after the close of the plan year in which the change in the plan was made. (Health care plans must provide notice to participants within 60 days after the adoption of the change.) If the change in the plan is "minor," the SPD must be updated every five years. If there are no changes in the plan, the SPD must be reissued every 10 years.

There are no specific rules for correcting an error in the SPD, as opposed to a change in the plan. Following the rules stated above should work. If it is a "material error," send a notice to all plan participants within 210 days (for a retirement plan) or 60 days (for a health plan). If it is not material, then fix the error in the next edition of the SPD.

However, take into consideration the potential impact this error has on participants. If the application of the plan document results in fewer benefits than what the SPD states, then you could have a disgruntled employee who might sue to recover benefits. Courts have ruled that the SPD prevails in such an instance. To avoid costly litigation, get the SPD changed as soon as possible.

On the other hand, if the plan document is more generous than the SPD, then a lawsuit is highly unlikely, and the change could be made at a more leisurely pace. Regardless of this, if the error is material, make the change as soon as possible.

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