Why Is It Important To Distribute An SPD?
The ERISA reporting requirements are a recent development in the health and welfare benefits sector. The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets forth requirements for the protection of employee benefits.
Among these requirements are reporting requirements for certain plan sponsors. You can navigate to https://www.cxcsolutions.com/compliance/spd-wrap-document/ to know about the requirements of SPD documentation.
A plan sponsor must file an annual report with the Department of Labor (DOL) on behalf of every qualified retirement plan it administers. The purpose of the ERISA report is to provide the DOL with information about your plan and the administration thereof.
In order to prepare an ERISA report, you must understand the difference between the Compensatory Administrative Period (CAP) and the Summary Plan Description .
The CAP is a period that begins on the first day of the plan year and ends on the last day of the plan year. During this period, you are allowed to make all required contributions and elections. The SPD is a document that provides a detailed description of your plan. It includes information such as how much money participants will receive at retirement, how much money will be paid in benefits, etc.
The plan administrator is legally obligated to provide the SPD to participants. With no SPD or an inadequate SPD, employers expose themselves to lawsuits from employees.