Never Make Your SPD Move Too Soon… or Should You?

by Lyn Domenick

As the late, great B.B. King would sing, never make your move too soon. That’s often a smart approach in life. But when it comes to employee benefits communications, that might not be the right advice. The recent legislation known as SECURE 2.0 has a delayed deadline for retirement plan amendments. Generally, for a calendar year retirement plan, the SECURE 2.0 amendment deadline is December 31, 2026; collectively bargained plans have until December 31, 2028, and governmental plans have until December 31, 2029. However, many of the relevant SECURE 2.0 provisions may already be in effect now—or will be very soon—in your plan. What are the plan sponsor’s obligations regarding communicating the SECURE 2.0 changes to employees?

In general, a plan sponsor must either update its Summary Plan Description (SPD) or issue a Summary of Material Modifications (SMM) to employees by no later than 210 days following the end of the plan year in which a retirement plan change is adopted. For a calendar year plan, that is typically July 29th following the plan year of the change (July 28th this year due to leap year). For example, if you made any plan amendments in 2023, you should issue an updated SPD or SMM by July 28, 2024.

Often the SMM deadline is considered to be measured from the date the plan is formally amended, and there is some regulatory support for that. However, a provision is arguably adopted when the sponsor agrees internally to implement the provision. Although it can feel a bit incongruous to include a plan provision in the SPD or SMM before the plan document has been amended, such protracted amendment deadlines may warrant earlier action. Fiduciaries have a duty not to miscommunicate to or mislead plan participants. Additionally, in order for many plan provisions to be considered “effectively available” to participants—as required for certain nondiscrimination testing—all participants must have the same information available to them.

One last thing! Pre-approved plan providers typically issue a revised SPD or an SMM only after a plan is formally amended. If you utilize a pre-approved plan document, you may wish to discuss an SMM with your document provider well before the plan is formally amended in 2026 (or later for some plans). If you have not yet communicated some SECURE 2.0 changes that went into effect in earlier years, you can include them in an SMM or SPD now. No time like the present, and the July 28, 2024 SMM deadline is fast approaching.