Employee Benefit Plans: The 411

Valuable Information on 401ks, Pensions, ESOPs, Form 5500 Preparation + More

Pack Rat? Hoarder? Neat Freak? Record Retention Guidelines

If you are either quick to toss things, or are one who keeps things around until you run out of space, you might want to take a step back and reevaluate your system. While the “round file” may be the best place to immediately “file” junk mail and the like, when it comes to important documents, both personally and especially professionally, you should have a document retention policy.

You may be legally required to retain some documents indefinitely, whereas others can be kept for a certain period of time. Henry & Horne provides our clients with a recommended guideline for various types of documents, and suggest that each corporation or organization adopt some form of document retention and destruction policy.

Your benefit plan (regardless of the type – 401(k), 403(b), ESOP, etc) should especially be mindful of these requirements and have a very specific policy in place. While typically the recommendation is keeping personnel forms like I-9s for three years after termination, if they are a participant in your benefit plan and do not take a distribution upon leaving your employ, you might consider hanging on to those documents until they do take a full distribution. Also, keep in mind that if you are ever audited by the DOL or the IRS, you might have other legal requirements in maintaining forms. If you have any questions, do not hesitate to contact your accounting and/or legal professional.

But just having a policy in place is worth about as much as the piece of paper it is printed on. You should set an annual date to go over your policy and all your documents. Consider it a spring cleaning, or a storage purge, where you go through all of your documents and destroy all those that have passed their retention period.

Just be sure to find a secure method of destruction – tossing them into the garbage behind the office is probably not the best idea (especially if the documents contain sensitive information such as personally identifiable information). Please note that setting your policy as “keep everything indefinitely” is neither effective nor efficient.

Katie Thomas, CPA