401(k) Record Retention

ERISA section 107 requires Plan Administrators to retain records sufficient to document the information that is required to complete the Form 5500. If a plan is exempt from filing the Form 5500, then the Plan Administrator still must maintain what would have been required, if not for the exemption.

The records maintained must be able to document the accuracy of the Form 5500 and all required schedules (whether the 5500 or schedules were actually filed), including vouchers, worksheets, receipts and applicable resolutions. For more information regarding plan records to be maintained, see below.

Responsibility for maintaining the records falls to the entity responsible for completing and filing the Form 5500, which is typically the Plan Administrator. If the plan is exempt from this filing, the entity that would have been responsible for completing the 5500 (generally, the Plan Administrator) is responsible for maintaining the records. For more information regarding employer roles and responsibilities, click here.

However, if another entity, such as an insurer, accountant or banker, is required to certify the information contained on the Form 5500, those entities bear the responsibility for maintaining the records associated with their certification.

These records must be available for examination for a period of 6 years after the filing date of the Form 5500. If the plan is exempt from this filing, then the records must be made available for a period of 6 years from the date the 5500 would have been filed. When calculating this time frame, be sure to start with when the form was actually filed. In many cases, this means the records must be kept for 7 or 8 years after the plan year ends.

The DOL has issued guidance for maintaining these records electronically. In general, electronic records must be as secure, legible and usable as the paper copies. For more information regarding electronic record keeping requirements, click here.

Plan Records to be Maintained

The amount of information contained on the Form 5500 (and therefore the amount of supporting records) will vary by size and type of plan. For example, a large plan will complete more accompanying Schedules than a small plan and must maintain the documentation used to complete each Schedule.

The actual records maintained may vary significantly by plan and use of third parties. The following are examples of the types of documents that may need to be maintained.

• Administration forms, such as deferral and investment elections and beneficiary designations
• All plan documents, amendments and resolutions
• Bonding information and fiduciary liability insurance
• Claim appeals/denials and supporting documentation
• Collective bargaining agreements (if applicable)
• Nondiscrimination tests and results
• Financial statements
• Form 5500, associated schedules and all documentation and worksheets that support these documents
• Interpretations of plan benefits and languag
• IRS approval letters and compliance statements (if applicable)
• Policies and procedures established for plan administration, such as loan procedures and qualified domestic relations order procedures
• Reporting and disclosure checklist and procedures
• Requests for information by plan participants or others
• Resolutions regarding plan, including actions taken to amend the plan, exercise discretion under the plan terms, and appoint trustees, committee members, etc.
• SPDs, including SMMs (if applicable)
• Summary Annual Reports (if required)
• Third party service contracts and all related documentation
• Trust documentation

The plan sponsor should gather these documents and any other plan related documents in order to be prepared for any inquiry by the IRS, the DOL, or any participant.  If documents are missing, the plan sponsor should contact current and prior service providers, legal counsel, recordkeepers, etc. to locate the documents and records.  Once the documents are gathered, the plan sponsor should create a system for maintaining and storing all of plan related documents and keeping the collection up to date.

Penalties for Noncompliance

Participants and beneficiaries may bring suit to enforce any provision of ERISA, including the recordkeeping requirements. The person or entity responsible for the recordkeeping failure may be responsible for the resulting costs to the plan.

The DOL or any plan participant may sue for breach of fiduciary duty in the event of a recordkeeping failure, and the fiduciary responsible for the failure could be held personally liable.

Although unlikely, criminal penalties may be assessed against any person who willfully violates (i.e. the person acted knowingly and voluntarily) an ERISA disclosure requirement.