Key Takeaways

• Adhering to ERISA guidelines and maintaining meticulous records are crucial for protecting participant interests and ensuring regulatory compliance in 401(k) and 403(b) plan management.
• Important documents to retain include plan documents, amendments, summaries, IRS Determination Letters, Form 5500 filings, participant data, and financial records, which should be kept for at least six years or indefinitely.
• Implementing a proactive approach to document management ensures smooth plan administration, audit readiness, and a reduction in administrative burdens.

Proper record retention is crucial for employers and plan administrators of 401(k) and 403(b) plans. Compliance with the Employee Retirement Income Security Act (ERISA) and ensuring smooth plan operation both hinge on meticulous documentation. Here’s an overview of what records need to be kept, why they are important, and best practices for retaining these records.

Understanding ERISA’s Record Retention Requirements

ERISA Sections 107 and 209:

ERISA mandates specific record retention rules under Sections 107 and 209. Section 107 requires that certain records be kept for six years from the date of filing, including:

• Required notices and disclosures
• Fiduciary plan documents
• Contracts and agreements
• Compliance documents
• Governmental filings like the Annual Report Form 5500
• Service providers often extend this period to seven years for extra compliance security.

Section 209 requires plan sponsors to retain records sufficient to determine benefits due to participants for as long as these records remain relevant. This means indefinite retention to ensure records are always available for participant requests or audits.

Essential Records to Retain

1. Core Plan Documents

• Plan Documents and Amendments: Main plan documents, adoption agreements, and amendments.
• Summaries and Descriptions: Summaries of Material Modifications (SMMs) and Summary Plan Descriptions (SPDs) detailing plan changes and benefits.

2. Compliance and Filings

• IRS Determination Letters: Confirm the plan meets IRS qualification requirements.
• Form 5500 and Non-Discrimination Testing Records: Annual report filings and testing records demonstrating regulatory compliance.

3. Participant and Financial Data

• Participant Data: Census data and demographic information necessary for benefit calculations and audits.
• Trust and Financial Records: Documents related to plan assets, transactions, and fiduciary oversight.

4. Governance and Service Agreements

• Retirement Committee Minutes and Board Resolutions: Records of decisions by plan fiduciaries.
• Service Agreements: Contracts with service providers outlining roles and responsibilities.

How Long Should Records Be Kept?

The general rule for retaining records related to 401(k) and 403(b) plans is to keep core plan documents, summaries, and descriptions for at least six years after filing or after the plan’s operational changes are filed. However, important compliance documents like IRS Determination Letters, Form 5500 filings, and records necessary for benefit calculations should be retained indefinitely to support ongoing regulatory compliance, benefit determinations, and audits. Participant data, crucial for accurate benefit calculations and responses to inquiries, should also be kept indefinitely. Financial records and governance documents need to be retained for at least six years but should be maintained indefinitely if they have a lasting impact on participant benefits or fiduciary decisions.

Recommendations for Record Retention

NESA recommends the following:

• Implement a Comprehensive Retention Policy: Develop a formal policy outlining record types, retention periods, and responsibilities. Regularly review and update this policy.
• Leverage Technology for Record Management: Use digital tools for efficient document storage and organization, ensuring records are backed up and accessible.
• Conduct Regular Audits and Reviews: Regularly audit records for compliance and maintain audit readiness.
• Prepare for Participant Requests and Audits: Establish processes for handling participant requests and audit responses, ensuring records are retrievable and organized.

Final Thoughts

Effective record retention is essential for compliant and efficient 401(k) and 403(b) plan management. By following ERISA guidelines and adopting robust record-keeping practices, employers and plan administrators can protect participant interests and ensure regulatory compliance. With NESA’s support, managing your plan documents becomes even more streamlined, reducing administrative burdens and enhancing compliance. A proactive approach to document management facilitates smooth plan administration and audit readiness.