Certified Plan Sponsor Professional (CPSP) Practice Exam

What is the maximum timeframe within which a summary plan description (SPD) must be provided to a participant after they become covered by the plan?

1. No later than 1 year

2. No later than 6 months

3. Immediately upon enrollment

4. No later than 2 years

The correct answer is: No later than 1 year

The maximum timeframe for providing a summary plan description (SPD) to a participant after they become covered by the plan is one year. This requirement is grounded in the Employee Retirement Income Security Act (ERISA), which mandates that plan administrators supply SPDs to participants within a specified period to ensure transparency about plan benefits, rights, and obligations. By allowing a full year for delivery, the regulation ensures that participants have adequate time to review the plan’s provisions thoroughly and understand their entitlements, which is essential for informed decision-making regarding their benefits. This period also takes into consideration the potential complexity of the plan documents and the time required for participants to access and comprehend the information provided. In contrast, other timeframes do not comply with ERISA regulations. Providing an SPD immediately upon enrollment may be beneficial, but it is not a mandatory requirement. The other options suggesting timeframes of six months or two years do not align with the legal stipulations, as they either fall short of ensuring timely access to plan information or exceed the designated allowance for delivery as per the law.