Retaining Plan Records
Posted on: 9/13/2017 11:27 AM
As a plan sponsor, you know that you have signiﬁcant reporting and disclosure responsibilities under the pension law (ERISA). Additionally, ERISA requires plan sponsors to retain broad categories of records related to meeting those responsibilities. To do so, a plan sponsor should understand the applicable rules and put in place a record retention policy governing how it periodically reviews, updates, preserves, and discards documents related to plan administration.
ERISA Section 107 requires that any person required by ERISA to ﬁle any report (such as Form 5500) must maintain, generally, for a period of “not less than six years” after the document is ﬁled, a copy of such report. Also required is retention of all records supporting information detailed in a plan’s Form 5500 and other reports and disclosures.
Supporting documents on this list include any records a government auditor might need to conﬁrm the accuracy and completeness of any information in the original report or disclosure. These include, but are not limited to, service provider information, corporate income tax returns (for reconciling deductions), and the plan’s nondiscrimination and coverage test results.
Records that need to be kept for an indeﬁnite period include those necessary to determine beneﬁts and eligibility for plan participation. By necessity, such records would include any related to dates of service, eligibility, vesting, contributions, and more. These records must be maintained for as long as the possibility exists — whether through request or litigation — that they might be relevant to determine any beneﬁts due (or which may become due) to employees and beneﬁciaries. In some cases, former employees may wait many years — possibly until retirement — to inquire about beneﬁts.
Speciﬁc Information To Keep
Records that should be retained include:
- The original signed and dated plan document
- Plan documents and communications given to plan participants
- The determination, advisory, or opinion letter for the plan
- Any ﬁnancial records
- Copies of Form 5500
- Payroll records used to determine eligibility and contributions
- Proof of the plan’s ﬁdelity bond
- Documents relating to plan loans, withdrawals, and distributions
- Nondiscrimination and coverage test results
- Personal information of employees, including name, Social Security number, date of birth, and marital/family status
- Employment history information
- Ofﬁcer and ownership history and familial relationships
- Election forms for deferral amount, investment direction, beneﬁciary designation, and distribution requests
- Listing of contribution and distribution transactions
- Notarized spousal consents and waivers
As long as the retention system meets ERISA requirements, records for the most part can be kept electronically. Generally, the retention process must:
- Allow easy conversion to legible and readable paper copies to satisfy ERISA’s reporting and disclosure requirements
- Have reasonable controls to ensure the accuracy, reliability, and authenticity of the records
- Maintain records in reasonable order and in a safe and accessible place to allow indexing, retaining, preserving, retrieving, and reproducing
- Not be subject to any agreements or restrictions that would compromise or limit compliance with ERISA’s reporting and disclosure requirements
- Establish and implement adequate records management practices including, but not limited to, following procedures for labeling of electronic records and saving backup electronic copies
Generally, paper records can be disposed of any time after being transferred to a compliant electronic record system. However, the retention of an original paper record is required if the electronic record would not constitute a duplicate or substitute record under the terms of the plan and applicable federal or state law.