Plan Recordkeeping

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Hi, I'm Monika Templeman and I'd like to discuss an important responsibility that goes with sponsoring a retirement plan - recordkeeping.

It's common for plan sponsors and administrators to wonder what retirement plan records they should keep and how long they should keep them.

The Internal Revenue Code requires that anyone liable for federal income tax must keep books and records available for IRS inspection.

In addition, ERISA requires employers to keep records sufficient to determine the benefits.

And, Revenue Procedure 98-25 provides the basic recordkeeping requirements if you maintain electronic records.

How long should you keep plan records? Retirement plans are designed to be long-term; participants build up benefits over time. As a result, plan transaction records cover many years.

Generally, you should keep records for your retirement plan until all benefits have been paid and the trust has been dissolved and the plan is no longer subject to an audit.

What should plan sponsors maintain and how long should they retain these items? Let's look at some main categories of records.

Retain the signed plan and trust documents, plan amendments, determination, opinion and/or advisory letters received for the plan, and any related annuity contracts or collectively bargained agreements.

You should also retain the Summary Plan Description, employee handbook, the plan administrator manual, notices to interested parties, private letter rulings and any other documents or minutes related to the plan operations.

Save documents describing any corrections you make to your plan. For example, keep calculations you make under the Self-Correction Program. Keep copies of Voluntary Correction Program submissions and compliance statements, as well as evidence that the required corrections were made. Also, save any Closing Agreements from an IRS retirement plan examination.

Retain employee information including name, Social Security number, date of birth and hire, compensation, plan entry date, account balance and vested account balance.

Keep all loan, hardship and domestic relation order documentation. Keep beneficiary and spousal information for the life of the plan and beyond to enable you to reply to a spouse or beneficiary contacting the plan requesting the plan benefits.

Retain all plan administrative items, including a listing of plan assets, valuation reports, actuarial reports, coverage, nondiscrimination and top-heavy tests, audited financial statements, and certified audits.

Finally, keep any plan forms you or your service provider filed. Some examples are Forms 5500, the Annual Report of an Employee Benefit Plan, Forms W-2 and 1099-R and any forms used to request a determination letter.

Keep these records for the life of the plan and for a time after you terminate it. Even if a plan is terminated, there's a possibility the IRS could select it for an examination and these items need to be available.

Good recordkeeping can help you find, fix and avoid costly mistakes that can jeopardize plan qualification. So when deciding whether to keep or discard a retirement plan document, it's wiser to err on the side of caution."

For more information, visit our website at irs.gov and search for our Taxpayer Documentation Guide. While not all inclusive, this guide provides a list of documents the IRS will need for a retirement plan examination. It can assist you in determining the documents you need to keep the plan current and available.