What does the summary plan description (SPD) provide for participants in a 401(k) plan?

The summary plan description (SPD) serves as a crucial document for participants in a 401(k) plan by outlining the key features and provisions of the plan. It is designed to provide a clear and concise summary of the plan’s terms, benefits, eligibility requirements, and the rights of the participants. This document is essential as it helps participants understand how the plan operates, the benefits available to them, and their responsibilities as participants.

The SPD is specifically mandated by the Employee Retirement Income Security Act (ERISA) to ensure that plan participants are adequately informed about their benefits and the rules governing the plan. Providing this information in a straightforward manner allows participants to make informed decisions regarding their retirement savings and to be aware of their rights and obligations under the plan.

While other options involve aspects of retirement planning, such as investment performance or financial statements, these do not encapsulate the primary function of the SPD. The SPD is not a performance report, comprehensive financial statement, or a report on individual account balances; instead, it focuses on summarizing the plan's structure and provisions essential for participants to know.