How long should employers retain employee benefits plan-related records?

There are different federal and state laws that could require entities to keep documents for a certain number of years. However, ERISA also requires that plan sponsors maintain certain documents.

Two sections of ERISA deal directly with the retention of records for employee benefits plans (including 401(k) and health plans). Specifically, ERISA 107 requires that all records pertaining to the Form 5500 be retained and kept available for examination for at least six years after the filing date. Under this requirement, the Form 5500 and all its schedules and attachments should be kept for the six-year period, as should any documentation underlying those Forms 5500, such as ledgers, checks and journals. So any documents that are filings or the underlying records supporting such filings should be kept for at least six years.

Also keep in mind that the filing date of the annual Form 5500 is generally seven months after the end of the plan year. As such, the employer may have to retain certain underlying documents for up to seven or eight years since the documentation to support that annual form may actually be dated at the beginning of the plan year. Example: The 2017 Form 5500 is filed in July 2018, and covers Jan. 1, 2017-Dec. 31, 2017. Documents pertaining to the filing might have been created in January 2017. Those documents would have to be maintained for six years after July 2018, which would be seven years and seven months after the January 2017 creation. This example also applies in the case of IRS audits of a Plan, with their three-year statute meaning that documents may need to be retained for a period closer to four years and seven months.

Additionally, ERISA 209 requires that an employer retain records that determine the benefits due or which may become due for each of its employees. This section is much broader, in that the documents are required to be kept as long as they may be relevant to a determination of benefit entitlements. The types of documents required to be kept under this section include, but are not limited to, plan documents, claims procedure documents, plan notices, group annuity contracts, age and service data used to determine benefits, payroll records, marital status records and beneficiary designations, and distribution documentation.

Fortunately, though, the employer can keep electronic copies as long as they meet the DOL rules for electronic recordkeeping. Under DOL Regulation 29 CFR §2520.107, the DOL allows for electronic recordkeeping if:

  1. The electronic recordkeeping system has reasonable controls to ensure the integrity, accuracy, authenticity and reliability of the records kept in electronic form;
  2. The electronic records are maintained in reasonable order and in a safe and accessible place, and in such manner as they may be readily inspected or examined (e.g., the recordkeeping system should be capable of indexing, retaining, preserving, retrieving and reproducing the electronic records);
  3. The electronic records are readily convertible into legible and readable paper copy as may be needed to satisfy reporting and disclosure requirements or any other obligation under Title I of ERISA;
  4. The electronic recordkeeping system is not subject, in whole or in part, to any agreement or restriction that would, directly or indirectly, compromise or limit a person's ability to comply with any reporting and disclosure requirement or any other obligation under Title I of ERISA; and
  5. Adequate records management practices are established and implemented (e.g., following procedures for labeling of electronically maintained or retained records, providing a secure storage environment, creating back-up electronic copies and selecting an off-site storage location, observing a quality assurance program evidenced by regular evaluations of the electronic recordkeeping system including periodic checks of electronically maintained or retained records, and retaining paper copies of records that cannot be clearly, accurately or completely transferred to an electronic recordkeeping system).

This FAQ is designed to give general information about an employer’s possible record retention responsibilities. Ultimately, employers should consult with their service providers and/or legal counsel before determining whether to keep or destroy plan records.