Milliman consultant Dominick Pizzano recently wrote an article for Benefits Perspectives about the importance of unifying defined benefit documents and administration practices. In the article, he advised employers about various ways they can keep their plan documents up to date with both administration and Internal Revenue Service (IRS) rules. Reading Pizzano’s article, we began to think about how often we work with summary plan descriptions (SPDs). Although Pizzano didn’t focus on it, there’s an additional tactic that might be helpful in marrying up the plan document and administration: updating the SPD.
SPDs describe the provisions of the plan document in language that can be understood by average participants and their beneficiaries. Updating the SPD with a focus on helping those enrolled understand how the plan works can often uncover differences among the plan document, the employer’s understanding of the plan, and how the plan is administered. Our clients have had such differences come to light a number of times as the result of revising SPD language, and the discrepancies were then able to be clarified. Revising or updating the SPD can be another strategy to add to Pizzano’s expansive list.