Retirement Plan Blog

Attorney Rush Nigot blogging about Document Retention and Electronic Discovery on his new Blog, Rush on Business, tells us that in today’s business environment, organizations need to respond to an increasing number of document requests, from regulatory compliance issues to internal investigations to full-scale litigation.

And there’s certainly an ERISA component to that. So in a brief Q and A format, here is some basic information about document retention for ERISA plans.

What are the legal requirements?

In the addition to the reporting and disclosure obligations that fiduciaries have, ERISA also requires that plan sponsors retain the records that support the information included in the 5500 filing and other reports.

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. All records that support the plan’s annual reporting and disclosure should be retained.

Who is responsible for retaining plan records?

While it is fairly common for a plan sponsor to contract with outside service providers, such as our firm, who 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 Department of Labor (DOL) requires employers to maintain records sufficient to determine the amount of benefits accrued by each employee participant.

What are best practices?

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, best practices would be to keep certain records 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. Most recently, the Internal Revenue Service (IRS) requested specific employee records from a client going back 10 years during a plan termination process. Fortunately, the employer was able to provide it.

But don't consider this a boring subject. The IRS or the DOL can require the plan administrator to recreate plan records.

Hello: Good Article. Just a quick question.

Under the second Q&A titled, "Who is responsible for retaining plan records," the second sentence says that, "the plan administrator remains ultimately responsible for retaining adequate records that support these reports and filings."

Is it really the plan administrator that remains responsible or the plan sponsor? I was under the impression that it was the latter's responsibility (even though a plan administrator/record keeper should of course have copies of this information).

Any feedback would be appreciated. Thanks.

Jason

ERISA requires that you be able to substantiate the calculation of a benefit payment. Under a traditional DB retirement plan, or even a 401(k) plan, this theoretically means keeping all records on compensation and employment sevice for the entire period a participant is accruing and later entitled to a benefit as a term vested or retiree, That can get you into the 40-50 year category, or essentially , perpetuity. of course, welfare plans are easier, since benefit payments are likely to be based on shorter time period calculations. But not always. For instance, life insurance based on compensation at retirement could get you back into the 20-30 year period.

Jason: The term "plan administrator" should have been capitalized. "Plan Administrator" is the person or entity responsible for the day-to-day administration of the plan, and is designated in the plan document. The Plan Administrator is a Fiduciary, and should not be confused with a Third Party Administrator (TPA) who is typically not a fiduciary.

Would this apply to original QDRO documentation (stamped court order)?

Molli, our clients tend to not throw away any original document - particularly a court order.