ERISA Documentation & Form 5500

Summary of Material Modification (SMM)

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A Summary of Material Modifications (or SMM) provides a summary of material changes to the plan and should be understood by the average plan participant.

Content

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There is no prescribed format for the SMMs, but they must communicate changes in a manner that is understandable to participants. An effective SMM will include: (i) plan name and SPD name; (ii) plan provisions being modified (maybe with references to the SPD pages); (iii) clarification that the SMM is a modification of the SPD; (iv) contact names; and (v) explanation of how to request another copy of the SPD.

Distribution

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An SMM must be distributed to all plan participants each time the plan is materially amended, or when changes are made that affect the content of the SPD, and a new SPD is not created.

Timing

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An SMM must be distributed within 60 days following an employer's decision to implement a material reduction in plan benefits. The deadline is extended to 210 days following the close of a plan year when the amendment is not a material reduction in benefits.

Example:

Lydia is enrolled in her employer’s group health plan, which runs from January 1st, 2020 to December 31st, 2020. On March 1st, 2020 Lydia’s employer changed the location of their home office, and therefore the contact information in Lydia’s SPD is no longer correct. Since this is not considered a material reduction in covered benefits, Lydia’s employer can wait until 210 days from December 31st, 2020 (July 29th, 2020) before they send Lydia a Summary of Material Modifications. Instead of sending an SMM, Lydia’s employer could decide to send an updated SPD by the same deadline.