Employee Benefit Plan Record Retention

record retention for employee benefit plansEvery so often, a client or potential client contacts us inquiring how long they need to retain their qualified retirement plan records.  The short answer is “it depends” and “for a long time”.  Of course, that short answer isn’t particularly helpful, so we have attempted to simplify the long answer below.

The Employee Retirement Income Security Act of 1974 (ERISA) establishes requirements for record retention by the sponsor of a qualified plan (typically the employer) in Sections 107 and 209.

Overview of Record Retention Regulations

Section 107 of ERISA requires those plan records used to support filings (for example the annual Form 5500) to be retained for at least six years from the filing date.  For example, if a 12/31/14 Form 5500 is filed on 10/15/15 (the extended due date), the support records must be kept until 10/15/21.

While this seems simple enough, Section 209, requires an employer to maintain records for a much longer period of time.  ERISA Section 209 relates to the maintenance of records needed to determine the benefits that are or may become due to each employee.  The statute provides that an employer must “maintain benefit records with respect to each of [its] employees sufficient to determine the benefits due or which may become due to such employees.”  Based upon this information, employers should assume these records must be maintained indefinitely.

ERISA Section 107

Under ERISA section 107, the following documentation (plan records used to support filings) should be retained at least six years after the Form 5500 filing date (as described above), including, but not limited to:

  • Copies of the Form 5500 (including all required schedules and attachments);
  • Nondiscrimination and coverage test results;
  • Required employee communications;
  • Financial reports and supporting documentation;
  • Evidence of Plan’s fidelity bond;
  • Corporate income-tax returns (to reconcile deductions)

ERISA Section 209

Under ERISA Section 209, the records used to determine the benefits that are or may become due to each employee should be retained indefinitely, including, but not limited to:

  • Plan documents, and items related to the plan document including, adoption agreements, amendments, summaries of material modifications (SMMs), summary plan descriptions (SPDs), the most recent IRS determination letter, etc.;
  • Census data and support for such information including records that are used to determine eligibility, vesting, and calculated benefits;
  • Participant account records and actuarial accrued benefit records;
  • Support and documentation relating to plan loans, withdrawals, and distributions
  • Board or administrative committee minutes and resolutions;
  • Trust documents

Electronic Data Retention

The Department of Labor (DOL) provides guidance on the retention of plan information through electronic format.  That guidance is as follows:

  • The electronic recordkeeping system has reasonable controls to ensure the integrity, accuracy, authenticity and reliability of the records kept in electronic form;
  • The electronic records are maintained in reasonable order and in a safe and accessible place, and in such manner as they may be readily inspected or examined;
  • The electronic records are readily convertible into legible and readable paper copy as may be needed to satisfy reporting and disclosure requirements or any other obligation under Title I of ERISA;
  • The electronic recordkeeping system is not subject, in whole or in part, to any agreement or restriction that would, directly or indirectly, compromise or limit a person’s ability to comply with any reporting and disclosure requirement or any other obligation under Title I of ERISA; and
  • Adequate records management practices are established and implemented

All electronic records must be legible and readable.  Generally speaking, most original paper records may be disposed of any time after they are transferred to an electronic recordkeeping system that complies with the requirements of the DOL.

When in doubt, save it!

 

Record RetentionAmanda Rae Iverson is the Chief Operating Officer (COO) at Pinnacle Plan Design.

 

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