Certified Plan Sponsor Professional (CPSP) Practice Exam

What document outlines the benefits and features of a retirement plan and is required by law?

1. Plan Document

2. Summary Plan Description (SPD)

3. Investment Policy Statement

4. Service Level Agreement (SLA)

The correct answer is: Summary Plan Description (SPD)

The Summary Plan Description (SPD) is the correct answer because it is a required document that outlines the benefits and features of a retirement plan. The SPD must be provided to plan participants and beneficiaries in a manner that is understandable and accessible. This document serves several important purposes: it explains the plan's rules, procedures, and benefits, ensuring that participants have the information they need regarding their retirement benefits. The law mandates that the SPD be distributed when individuals become plan participants and at regular intervals thereafter, allowing for transparency and helping participants understand their rights and obligations under the plan. The requirement for the SPD is rooted in the Employee Retirement Income Security Act (ERISA), which intends to protect the interests of employee benefit plan participants and their beneficiaries. By clearly outlining benefits, eligibility, and the process for claims, the SPD plays a crucial role in ensuring that participants are well informed about their retirement options.