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Best Practices for Benefit Plan Record Retention

Record retention is an often overlooked part of running an employee benefit plan. Benefit plans must adhere to record retention requirements mandated by ERISA, IRS, DOL and other federal and state authorities. However, record retention is as much about what you should retain and for how long as it is about what you should discard and when; often, benefit plans conclude another year of providing benefits to participants by putting documents in a filing cabinet(s) or in boxes to sit for months, years or decades. In addition to these paper records, electronic documents should also be a major component of any record retention policy. Although special rules exist in many areas, a general rule of thumb is that records for an employee benefit plan should be retained for at least 6 years following the filing of Form 5500. Obviously an ongoing IRS or DOL audit would lengthen this period of time.

Every benefit plan should adopt a written retention policy for staff to follow. The policy should receive the blessing of plan counsel to ensure that federal and state laws are being considered and followed. Some general types of records that should be included as a part of any policy include:

  • Employer remittances and contribution reports
  • Benefit claims, benefit applications and supporting information
  • Vendor invoices, billings and contracts
  • Plan documents including the trust, Summary Plan Description, and related amendments and modifications
  • Employment related records, if the Fund is an employer, including payroll records
  • Receipts, disbursements, bank and investment statements
  • Electronic data including emails and scanned documents
  • Board of Trustee minutes, budgets, financial statements and annual reports/tax returns

The greatest concern I see as an independent auditor is the lack of guidance for plans regarding e-mail storage, retention and production. E-discovery rules in legal proceedings are very complicated. More evidence is produced today from electronic records than from paper records. How would your Fund retrieve e-mails, either sent or received, dating back 3 years? E-mail archive services are available in the marketplace to manage these issues and plans should consider such solutions to manage the e-discovery process before the lawsuit appears at the fund office.

Further guidance for any benefit plan interested in creating a comprehensive record retention policy can be found in a book published by the International Foundation of Employee Benefit Plans (IFEBP) entitled Record Retention Requirements for Taft-Hartley Welfare & Pension Funds. This publication is available on the IFEBP website at www.ifebp.org.

If you have any additional questions or would like to speak with one of Withum’s ERISA and employee benefit plan specialists, fill in the form below and we will be in touch.

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