ERISA record retention may not be of those sizzling retirement plan topics for some folks. But please don’t stop reading.
It’s an important issue in today’s ERISA’s environment in which Plan Administrators and other fiduciaries must meet complicated compliance reporting requirements, oversight from regulatory agencies, and sometimes litigation.
So here is some basic information about document retention for ERISA plans in a Q and A format.
What are the legal requirements?
The short answer is that all plan-related materials should be kept for a period of at least six years after the date of filing of an ERISA-related return or report, and the materials should be preserved in a manner and format (electronic or otherwise) that permits ready retrieval. In addition, all records that support the plan’s annual reporting and disclosure should be retained.
What documents should be retained?
There is a potpourri of ERISA documents that should be retained. Some, but not all, include the following:
- Original signed and dated plan document and all original signed and dated plan amendments.
- Copies of all corporate or partnership consents.
- Copy of the most recent determination letter from the IRS.
- Evidence of the plan’s fidelity bond;
- Documentation supporting the trust’s ownership of the plan’s assets;
- Copies of all communications to employees, e.g., Summary Plan Descriptions, Summaries of Material Modifications, and any other materials provided to participants.
- All financial reports, including Trustees’ reports, journals, ledgers, certified audits, investment analyses, balance sheets, and income and expense statements.
- Copies of Form 5500.
- Copies of nondiscrimination and coverage test results.
- Payroll records used to determine eligibility, contributions, and vesting.
- Copies of benefit calculations and vesting.
- Copies of all documents relating to plan loans, withdrawals, and distributions, including spousal consents, if applicable.
- Distribution records, including Form 1099s.
- Corporate income tax returns to reconcile the employer’s tax deductions.
Who is responsible for retaining plan records?
While it is fairly common for a Plan Administrator to contract with outside service providers, such as our firm, to provide certain reports and prepare the 5500 filings, the Plan Administrator remains ultimately responsible for retaining adequate records that support these reports and filings. In addition, the Department of Labor requires employers to maintain records sufficient to determine the amount of benefits accrued by each participant such as payroll and other employee census data.
What are best practices?
Instead of relying on the “6-Year Rule” discussed above, best practices would be to maintain certain records for the life of the plan. The thicker and more accessible the paper trail, the easier it will be for the plan to respond to an inquiry from a participant or the Internal Revenue Service and the Department of Labor. Both agencies can request information from “back in the day.” It’s far easier to have the records in the first place than to have to recreate them.
THE TAKEAWAY
Plan Administrators should work with their service providers to design and maintain a record retention plan. Be sure it covers both paper records and electronic data. Once you have a record retention (and a destruction) plan, integrate that plan into your plan administration process.