I smiled when our receptionist buzzed through and told me that Bill was on the phone. He had been a client for many years, but he had terminated his plan so we hadn’t spoken for a long time. Bill had been going through his office and found a whole file drawer full of his old retirement plan records. He had called me to ask which ones he could safely destroy and which he should keep.
As a Third Party Administrator, Benefit Resources keeps electronic records of our clients’ plan information, but the company that sponsors the plan is ultimately responsible for keeping records. If the Internal Revenue Service comes knocking on your door to audit your company for any reason, chances are they will ask for records related to the retirement plan. Electronic copies of documents are typically accepted without hesitation. Failure to have requested records available could potentially result in the disqualification of your plan.
Following are the best practices that I advised Bill for his retirement plan records: 
• PLAN DOCUMENTS: Keep copies of any signed plan documents and amendments that were ever adopted.
• FORM 5500 FILINGS: The statute of limitations for audit of Form 5500 filings is three years. For safety considerations, I recommend keeping at least 5-years of filings on hand. For companies who don’t file (sole practitioners whose balance is under $250,000 are exempt from filing) I recommend keeping all records and investment account statements on hand.
• DISTRIBUTIONS: Keep copies of all Form 1099-R filings and records of distributions to participants from the plan. It never ceases to amaze me how many people come out of the woodwork 10-years after termination and ask if they still have money in a plan. It’s nice to be able to prove that a check was issued, and 1099R was sent to them.
• HARDSHIP WITHDRAWALS: Hardship application and substantiation documentation, calculations for determining appropriate amount, and proof of payment and Form 1099-R should be kept for as long as the employee is still active, and at least 3-years following final distribution of account balance.
• LOANS: Loan applications, promissory notes, payments made and reports of any defaults should be kept for the duration of the loan, and at least 3-years following the final payment.
• PAYROLL RECORDS: I recommend keeping an annual payroll summary that shows details of gross pay and deductions taken for at least 5-years.
• FINAL PLAN YEAR: Keep a copy of the last year’s administration of the plan. Not for nostalgia, but just to show final distributions and account balances going to zero.
These recommendations are ours, and should be confirmed with other advisors before having a shredding party. If our clients find they’re missing something that they need, I welcome them to contact us as we have built a very robust records retention and storage process here at Benefit Resources. We may not be able to get to everything in a day, and there may be a retrieval charge, but we’ll get you a copy if we have it.
I’m happy that I was able to help Bill clean up his office years after he was no longer a client. If you don’t feel like your TPA has your back, or isn’t providing you the kind of support you may need to operate your plan comfortably, we’re more than happy to offer you a proposal of our services and fees. Click here to have a custom proposal delivered to you.
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