ERISA Records Retention Policy

Hang On To Your Records discusses two records retention guidelines, the "7-Year Rule" (business records) and the "6-Year Rule" (ERISA records):

But there's an additional retirement plan component to all of this, particularly as the July 31 deadline for filing a Form 5500 for most retirement plans approaches. The myth here is that retirement plan records only have to be retained for a period of at least six years after the date of the filing of an ERISA-related return or report, and that 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, this myth goes.

The post goes on to state that you should maintain records for the life of the plan. This is certainly the most conservative approach. While you may rely on your service providers to maintain your records, remember that it is the responsibility of the Plan Administrator (usually the company) to maintain and retain your records. I recommend that you start by understanding your internal records retention policy as well as the policy of your service provider(s). You should work with your counsel and ESOP consultant to develop a detailed records retention plan.

Record Retention Guide discusses the ERISA retention requirements and states 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." It provides a list of documents that a plan must retain for ERISA purposes:

• 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;

It also discusses retaining electronic records:

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).