Documenting Fiduciary Responsibility

Documenting Fiduciary Responsibility

Maintaining and retaining documentation is one of the most important responsibilities of plan fiduciaries. Not only is it beneficial to have the appropriate documentation to support historical plan activities and participant elections regarding investment choices, distribution requests, loan requests, etc., it will also prevent confusion and problems down the road, and it is required by the Internal Revenue Service (“IRS”) and Department of Labor (“DOL”) to support the information reported on the Form 5500 filings!

There are numerous bodies which govern employee benefit plans. The Internal Revenue Service (“IRS”) has a statute of limitations of three years. This means a Form 5500 filing is typically open to IRS audit for three years after the due date. ERISA, however, imposes stricter rules. Different code sections under ERISA dictate different retention requirements. On one hand, ERISA states information included on the Form 5500 is required to be kept for six years after the return was filed; a subsequent code section notes that any information relating to a participant?s or beneficiary?s entitlement to benefits must be maintained which could be for a period in excess of six years.

Therefore, the following considerations should be made by plan fiduciaries:

Documents to maintain as long as the plan is in existence:

  • Plan document and plan summary description
  • All plan amendments
  • All determination letter(s)
  • Support for a participant or beneficiary?s entitlement to benefits
  • Documents to maintain for a minimum of six years (relates to Form 5500):
    • Participant election forms and support for deferrals, distributions, and loans
    • Census data
    • Non-discrimination testing results
    • Form 5500 completed filings
    • Plan financial statements, investment reports, and certification of investments from the custodian (if applicable)
  • Consider maintaining documents in electronic storage versus physical files
  • Obtain and keep copies of documents from third-party providers (if the plan changes providers it is unlikely the third party will maintain documentation for longer than the minimum period required)

Plan sponsors are advised to discuss retention requirements with qualified ERISA legal counsel.

 

NEED MORE INFORMATION?

If you need more information regarding this or any other topic affecting your retirement plan, visit our Withum ERISA Knowledge Corner online, follow us on Twitter at WSB_ERISA or contact us at [email protected] to arrange a free consultation today.

The information contained herein is not necessarily all inclusive, does not constitute legal or any other advice, and should not be relied upon without first consulting with appropriate qualified professionals for your plan’s individual facts and circumstances.

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