Follow this record retention checklist

Qualified retirement plans are required to report and disclose certain obligations as part of the Employee Retirement Income Security Act of 1974, but what isn’t well known is that ERISA also spells out how long a plan sponsor must retain plan documents and records that support those obligations, according to Kravitz.

Kravitz, which represents Kravitz, Inc. and Kravitz Investment Services, Inc., points out that all records that support the plan’s annual reporting and disclosure requirements should be retained. All plan-related materials and records must be kept for at least six years after the date of filing an ERISA-related return or report. Records should be preserved in a manner and format that permits ready retrieval, the company said.

It is the plan administrator’s responsibility to retain these records, even if they’ve contracted with an outside service provider to produce their Form 5500 filing, Kravitz said.

The Department of Labor also requires employers to retain records that show how much benefits have been accrued by each plan participant. Here’s it’s list:

1.     Plan documents: ERISA requires that plan administrators retain the original signed and dated plan document and all original signed and dated plan amendments; a copy of the plan’s most recent IRS approval letter; and copies of Form 5500. Plan documents should be retained until the plan is terminated, Kravitz said.

2.     Supporting documents: Reports that support the plan documents also should be kept, according to Kravitz, including financial reports, Trustees’ reports, journals, ledgers, certified audits, investment analyses, balance sheets, income and expense statements, corporate/partnership income-tax returns, documentation supporting the trust’s ownership of the plan’s assets, evidence of the plan’s fidelity bond, and copies of nondiscrimination and coverage test results.

3.     Census and other data: Payroll records that determine participant eligibility and contributions should be retained, according to Kravitz. Records that establish hours of service data also must be kept to demonstrate the determination of allocations and vesting.

4.     Communications: Employers should keep copies of all communications that are provided to participants and beneficiaries

5.     Participation forms and tax reporting: Companies need to keep documents that show they have followed plan documents with participant transactions, for plan audit purposes.

6.     Duration of storage: Records should be kept for at least six years after a government filing. Kravitz recommends that employers keep these records for the life of their retirement plan. The DOL does allow electronic copies of these documents as long as they meet certain specifications.

Kravitz, Inc. provides actuarial and consulting advice on the design and administration of retirement plans and Kravitz Investment Services, Inc. is a registered investment advisory firm that provides investment advice and asset management.

Also read:

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