The September 2003 edition of the Employers Handbook: Complying with IRS Employee Benefit Rules outlined how both cases hinged on the employers efforts to provide information to employees concerning their benefits plans. Both plans allowed inconsistencies to exist between their SPDs and plan documents that created confusion and made it unclear what benefits employees would receive. Both plans had a common reliance on the primacy of plan documents over an SPD. In the end, that reliance (or lack thereof) proved to be pivotal.

Denali FM was recently engaged to review a Plan’s governing documents for a new investment advisory client. During the review of the SPD we uncovered a dozen inaccuracies, numerous internal inconsistencies, several obvious misstatements of fact, and other areas of confusing language. In this circumstance, the Plan Sponsor had been using the SPD for almost three years. They have now gone back to their bundled mutual fund vendor for a re-write of their SPD.

There is a statutory fiduciary duty to monitor an ERISA Plan’s operational compliance with the Plans governing documents. One health and welfare consultant we have great respect for has commented that 95+% of all SPD documents he encounters contain substantive inaccuracies. Most ERISA attorneys would agree with the statement that the vast majority of their clients do not know their Plan’s documents. With judges taking the orientation that whatever is in the participants hands is what counts, we suggest that a review of all ERISA SPDs be a worthy project for you to put at the top of your list for 2004.