Plan sponsor record retention guidelines

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

As plan auditors we are frequently asked how long documents relating to a plan should be retained by the plan sponsor. Like anything related to the Internal Revenue Service (IRS), there is no one simple answer. Before discussing some general guidelines on record retention, let’s discuss some general responsibilities of the plan sponsor to operate a plan successfully.

First and foremost, a plan sponsor should select and retain a qualified Third Party Administrator (TPA), to ensure both the plan sponsor and the TPA has the same goal of administering a retirement plan for the benefit of the employees. Secondly, the plan sponsor is required to have a written plan document which outlines the provisions of the plan. These plan documents are periodically amended to keep them current with IRS requirements. Lastly, the plan sponsor must communicate the plan provisions to the participants through Summary Plan Descriptions and Summary of Material Modifications. Plans must be operated in accordance with the current plan document and the items listed above must be able to be substantiated to the IRS.

Just like with individual and business tax returns, benefit plans are subject to audit and records should be retained for substantiation. The Employee Retirement Income Security Act (ERISA) requires records to be retained for six years; however, records to determine an employee’s benefit must be retained until after the employee withdraws their benefit. Below are some general guidelines on retirement plan record retention:

Plan documents, including Basic Plan
Document, Adoption Agreement,
Amendments, Summary Plan Descriptions, and Summary of Material Modifications
For the life of the plan and for six years after the plan has terminated
Participant Records, including beneficiary, distribution, enrollment, investment forms and investment statements with participant’s account balance and activityAt least six years after the participant's complete withdrawal from the plan
Administrative Reports, including annual census data, contribution calculations and plan testingFor the life of the plan and for six years after the plan has terminated
Federal forms, including Form 5500 and
related schedules, SSA-8955, 5330
1096, 1099-R and Summary Annual Reports
For six years

Leslie Lee, CPA