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Retirement Plan Record Retention Requirements

Thursday, May 5, 2016   (0 Comments)

The administration of a retirement plan can create a massive amount of paperwork and data, including plan documents, participant notifications, as well as contribution, benefit, and testing information. Following is an overview of the recordkeeping requirements as set forth in the ERISA statute and U.S. Department of Labor (DOL) regulations.


Whose duty?
Ultimately, the responsibility to retain these records lies with the plan administrator (the employer).Though plan sponsors commonly contract with outside service providers to provide certain reports and prepare the plan’s Form 5500 filing, the plan administrator is ultimately responsible for retaining adequate records to support the reports and filings.


Record retention—six-year requirement
ERISA Section 1074 requires any person required to file any report (such as a Form 5500) to maintain, generally, for a period of “not less than six years” after the document was filed, a copy of such report. Section 107 also requires that that all records that support these reports should also be retained. These would include financial reports, trustees’ reports, journals, ledgers, certified audits, investment analyses, balance sheets, income and expense statements, corporate/partnership income-tax returns (to reconcile deductions), documentation supporting the trust’s ownership of the plan’s assets, evidence of the plan’s fidelity bond (if applicable), and copies of nondiscrimination and coverage test results. 


Documentation that supports decisions made by the plan administrator should also be retained, including copies of all corporate/partnership actions and administrative
committee actions relating to the plan.


Record retention—indefinitely
Additionally, ERISA Section 2095 simply requires that a plan administrator “maintain records with respect to each of [its] employees sufficient to determine the benefits due or which may become due to such employees.” Because no time limit is set forth in the statute, plan administrators must retain such records indefinitely. These will include the following: Plan documents. Because the plan documents will largely determine any right to benefits, the plan administrator must retain the originals of all executed plan documents, amendments and/or restatements, resolutions, adoption agreements, and all determination, advisory, or opinion letters for all plan documents. Likewise, the plan administrator will need to retain all participant communications, including summary plan descriptions, summaries of material modifications, educational materials and required notices.


Employee/participant information. Essential information to retain for employees includes:
– Personal details, including name, Social Security number, etc.
– Determination of eligibility
– Employment history, including hire, termination and rehire dates
– Beneficiary designations
– Notarized spousal consents and waivers
– Loan, hardship and distribution documentation


Payroll records used to determine participant eligibility and contributions (including details that support an exclusion from participation) should be retained. Records that establish hours of service data must also be kept to demonstrate the determination of allocations and vesting.


Note: It is critical that sponsors keep complete census data, not just data on employees who are eligible to participate.

Additionally, plan sponsors should maintain records regarding employment-related claims and the qualification of domestic relations orders.


Electronic storage
According to DOL regulations, electronic media may be used to comply with the record retention requirements, provided the recordkeeping system meets several requirements, including:
– The system should have reasonable controls to ensure the integrity, accuracy, authenticity and reliability of the records.
– The electronic records are maintained in reasonable order in a safe and accessible place, and in such a manner as they may be readily inspected or examined. For example, the recordkeeping system should be capable of indexing, retaining, preserving, retrieving and reproducing the electronic records.
– The electronic records can be readily converted into legible paper copies.
– Adequate records management practices are established and implemented. 


What to do with paper 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. 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 or federal or state law.


Source: April 21, 2016. ERISA-Extra Spring 2016. ©UBS2016. Copyright 2015 by DST. All rights reserved. Used with permission and provided by UBS Financial Services Inc. for use by its Financial Advisors. UBS Financial Services Inc. is a subsidiary of UBS AG. Member FINRA/SIPC.




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