Record Retention Guide
Rev. 07/21/05, E-mail Alert 2005-14

ERISA sets forth specific reporting and disclosure obligations with respect to qualified retirement plans. A lesser-known fact is that ERISA also requires plan sponsors to retain for a fixed period of time the records that support the information included in the 5500 filing and other reports.

The topic of record retention can be broken into three general areas:

• What records should be kept?
  
• How long should they be kept?
  
• How should these records be archived?
  

The short answer to these three questions 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.

All records that support the plan’s annual reporting and disclosure should be retained. The responsibility to retain these records lies with the plan administrator (the employer). While it is fairly common for a plan sponsor to contract with outside service providers who may provide certain reports and prepare the 5500 filing, the plan administrator remains ultimately responsible for retaining adequate records that support these reports and filings. In addition, the DOL requires employers to maintain records sufficient to determine the amount of benefits accrued by each employee participant.

The documents that a qualified retirement plan must retain for ERISA purposes include the following:

• The original signed and dated plan document, and all original signed and dated plan amendments. Make sure the dates and signatures are easily visible;
  
• Copies of all corporate/partnership actions and administrative committee actions relating to the plan;
  
• Copies of all communications to employees. These include Summary Plan Descriptions, Summaries of Material Modifications, and anything else describing the plan that is provided to participants or beneficiaries. Remember to include copies of videos, slides, and e-mails;
  
• A copy of the most recent determination letter from the IRS, or the form to request that determination letter, if one is pending;
  
• All financial reports, including Trustees’ reports, journals, ledgers, certified audits, investment analyses, balance sheets, and income and expense statements;
  
• Copies of Form 5500;
  
• Payroll records used to determine eligibility and contributions including details supporting any exclusion from participation. It is critical that sponsors keep complete census data, not just data on those who are eligible;
  
• Hours of service and vesting determinations;
  
• Plan distribution records, including Form 1099Rs;
  
• Corporate income tax returns (to reconcile deductions);
  
• Evidence of the plan’s fidelity bond;
  
• Documentation supporting the trust’s ownership of the plan’s assets;
  
• Copies of all documents relating to plan loans, withdrawals, and distributions. Include copies of spousal consents;
  
• Copies of nondiscrimination and coverage test results;
  
• Any other plan-related materials, such as claims against the plan;

As noted above, generally, these documents should be kept for a period of six years after the date of the filing to which they relate. However, good practice suggests that certain records be kept for the life of the plan; this would include all plan documents dating from the plan’s inception. The thicker the paper trail, the easier it will be for the plan to respond to an inquiry from a governmental agency or a request for information from a plan participant. Records must be kept in a manner in which the records can be readily retrieved. To the extent that records are lost, stolen or destroyed before the expiration of the six-year period, the plan administrator will be required to recreate the records, unless to do so would result in excessive or unreasonable costs.

According to DOL regulations, electronic media may be used for purposes of complying with the record retention requirements provided the following requirements are met:

• The recordkeeping system has reasonable controls to ensure the accuracy of the records;
  
• The recordkeeping system should be capable of indexing, retaining, preserving, retrieving and reproducing the electronic records. The retrieval issue becomes more interesting as equipment is updated and upgraded. For example, records retained on floppy disks may fail this test, if no system drives are maintained to read that media;
  
• The electronic records can be readily converted into legible paper copies;
  
• The electronic recordkeeping system is not subject to restrictions that would inappropriately limit the access to the records.
  

Most original paper records may be disposed after they are transferred to an electronic recordkeeping system, provided the recordkeeping system complies with the above requirements. It is important to note that the original may not be discarded if it has legal significance or inherent value in its original form (e.g., notarized documents, insurance contracts, stock certificates, and documents executed under seal).

Proper and complete archiving of plan records is essential. Due to technological advancements, many transactions do not take place on paper, which is an added challenge to the recordkeeping requirements. None-the-less, the plan’s records should be reviewed periodically, updated, and, to the extent possible, purged. This will be time well spent and can do double duty as an overall audit of the plan’s operations.

As a practical matter, plan sponsors may want to keep records for a longer period of time in case of legal actions from participant divorce actions (QDROs) or lawsuits from disgruntled employees.