401(k) Plan Record Retention: Be a Saver

Spring cleaning is a popular ritual for good reason—the annual decluttering of your house, garage, yard, or office space is highly satisfying. But if you’re in charge of administering your company’s 401(k) plan, resist the urge to recycle old retirement plan documents, reports, and records. Why? Because one of ERISA’s key rules for benefits plans pertains to the retention of plan documents and records. Let’s review how ERISA’s mandates apply to your retirement plan, as well as how to keep your records and files tidy while fulfilling your fiduciary responsibilities.

ERISA Sections 107 and 209 state that plan and participant documents, records, reports, and information must be retained for a period of six years after the filing date or, in some cases, retained in perpetuity. Here’s a basic list of items—organized into two categories—that retirement plan fiduciaries must retain for the specified periods:

Keep these records in perpetuity:

  • Executed plan documents (original 401(k) plan document, adoption agreement, amendments, restatements, and summary plan description)
     
  • Documentation related to investment or retirement plan committee meetings (investment policy statement, meeting minutes, quarterly or annual financial reports, and internal electronic or written communications that discuss the decision-making process)
     
  • Forms used to process distributions, loans, qualified domestic relations orders, and hardship distributions, including backup documentation

Keep these records for at least six years:

  • Annual tax filing forms (IRS Form 5500, summary annual reports, and, if required, audited financial statements)
     
  • Participant records and forms pertaining to salary deferral elections or changes; plan enrollment; dates of hire, termination, and eligibility; compensation; beneficiaries; and breaks in service
     
  • Annual nondiscrimination testing results
     
  • Fidelity bond coverage and/or fiduciary insurance coverage
     
  • Participant communications (e.g., enrollment materials, educational seminar materials, and 404(a)(5) fee disclosure notices)

Electronic Storage Considerations:

If your office is paperless, the use of technology to store documents is allowable under ERISA, provided some key conditions are met. If your plan’s recordkeeper, third-party administrator, or plan advisor offers virtual fiduciary vaults, you can use this option to maintain records electronically in compliance with ERISA’s document storage mandate. And here’s another big benefit of electronic storage: if your plan is audited by the IRS or the Department of Labor, providing complete, accurate documents, reports, and records upon request will be simple. Not only will you save time and energy, but you could avoid paying penalties for failure to comply with ERISA’s record retention requirements. To sum up, retirement plan fiduciaries should focus on two key principles to stay compliant with ERISA record retention rules: organization and preparedness. Having—and abiding by—an efficient system for retaining retirement plan documents is paramount!