A qualified plan—such as a 401(k) plan - must provide plan participants with a form of Summary Plan Description (SPD), which meets the specific requirements set forth in ERISA. Additionally, a qualified plan that offers Company Stock as an investment must provide plan participants with certain information in the form of a 10(a) Prospectus. However, you should not incorporate by reference any of the Company's SEC filings.
Several recent cases have found the potential for a breach of fiduciary duty if the incorporated by reference documents are not accurate (thus converting a financial restatement issue or SEC violation into a fiduciary breach). Typically, these cases involve a misstatement in the company's financial reporting to the SEC. The potential penalties and market consequences of this are bad enough. However, because the ERISA documents incorporate the SEC filings by reference, the plaintiffs' lawyers are also able to sue the plan's fiduciaries for a breach of fiduciary duty under ERISA.
The 10(a) Prospectus — or "Statement of General Information" — should be a separate document, which incorporates the SPD by reference.
This is a subtle difference, but it better protects the Plan fiduciaries. The separate 10(a) Prospectus will refer to the SPD (the SPD will still include the legend on the inside cover page). (A third document constituting the required 10(a) Prospectus would be one with charts showing the three years of annual returns for each investment fund offered.)
Michael S. Melbinger