ERISA has separate and distinct legal requirements for
summary plan descriptions (SPDs) and plan documents. Under the law, SPDs must
be written in a manner "calculated to be understood by the average plan
participant." In fulfilling this SPD requirement, the plan administrator
is responsible for exercising considered judgment and discretion by taking into
account such factors as the level of comprehension and education of typical
participants in the plan and the complexity of the terms of the plan.
Consideration of these factors "will usually require the limitation or
elimination of technical jargon and of long, complex sentences."
By contrast, the plan document must include specific items
required under federal laws such as ERISA and HIPAA, regardless of their
complexity. In addition, it must contain all technical and legal specifics
that are not only required to sponsor and administer the plan, but also to
withstand any legal challenges that may be brought against the plan or the
employer.
Including the lengthy and often technical terms of the plan
document in the SPD is likely to cause confusion for the average plan
participant, rather than promote an understanding of plan benefits and
eligibility requirements. Similarly, omitting these details from the plan
document would result in a document that could be legally inadequate.
Therefore, separate documents are recommended to address
these separate legal requirements.