PLANSPONSOR - February/March 2021 - 38

ERISA EXAMINATION
Record Keeping
A document retention policy can guard against future claims
O
ne's teenage daughter may talk about how she'll be
friends with her besties " 4-Ever, " but should the same
apply to retaining retirement plan records? Retirement
plan administration generates mountains of paperwork-even
storing it electronically can be challenging. As a result, we regularly
get questioned as to what must be kept and for how long.
To answer these questions and make sure
the proper information is being retained,
plan committees should consider developing
a record retention policy, establishing
how long and in what manner to retain plan
information.
As a starting point, when preparing
the date the post-distribution certification is filed with the PBGC.
Besides these specific legal requirements-as specific as
... claims and
disputes may
arise long
a retention policy, there are both Internal
Revenue Code (IRC) and Employee Retirement
Income Security Act (ERISA) requirements
that should be considered, as well as Pension
Benefit Guaranty Corporation (PBGC)
requirements applicable to defined benefit
(DB) plans. These include the following:
* IRC Section 6001. This section and its regulations require
tax records and information returns to be kept as long as they
could be relevant to tax claims. Generally, these records may need
to be retained for at least seven years from the last tax year to which
the record was relevant.
* ERISA Section 107. This provision generally requires plans
to keep records and information relied upon in filing Form 5500
for at least six years after the date on which the report is filed. This
includes information that may be needed to verify or explain the
report, such as data worksheets and similar information.
* ERISA Section 209. This section generally requires that
plans maintain records sufficient to determine an individual's
benefits. As no time frame is listed, this means the information
should be retained for any period during which a benefit is due
or may become due plus the applicable state's contract limitation
period. These limitation periods could be as long as 10 years.
* PBGC Regulations Section 4007.10. This regulation
requires retention of records related to the payment of PBGC
premiums for defined benefit plans for at least six years after the
premium due date. Additionally, in the case of a DB plan termination,
the PBGC says that documents demonstrating compliance
with the plan termination rules must be kept for six years after
after a worker
has terminated
employment ...
they are in the context of retaining information to determine
benefits-the committee should consider what information may
be needed in resolving benefits claims and disputes. Particularly
in the retirement plan context, claims and disputes may arise
long after a worker has terminated employment
and stopped receiving benefits. For
example, we have seen former workers who
left a job many years earlier contact sponsors
after receiving a Social Security Potential
Private Retirement Benefit Information
notice. Retaining proof of distribution can
be useful in responding to such a claim.
For this reason, documents that demonstrate
benefits were paid are useful to keep,
perhaps indefinitely (4-Ever!).
In addition to addressing how long to
retain documents, a record retention policy
should address how the information will be
stored-i.e., in paper or electronic format. Some information may
be appropriate for electronic storage while other may be better
kept as physical copies. Both the IRS and Department Of Labor
(DOL) have issued guidance regarding electronic recordkeeping.
ERISA Regulation 2520.107-1 and IRS Revenue Procedure (Rev.
Pro.) 97-22 provide similar guidance, generally demanding that
the electronic recordkeeping system have controls to ensure accuracy,
reliability and accessibility, among other requirements. The
records also need to be kept secure (we have previously addressed
cybersecurity issues, and similar considerations apply here).
If a plan contracts with third-party vendors to store records,
it is important to consider how the vendor will satisfy retention,
accessibility and security requirements, as the committee may
be held responsible for the vendor's failure to comply. Reviewing
the vendor's retention policies and procedures, making sure
the obligations are addressed in the vendor contract, and periodically
monitoring the vendor's compliance can help address
these fiduciary responsibilities.
Summer Conley is a partner in the Los Angeles office of Faegre
Drinker Biddle & Reath LLP. Michael Rosenbaum is a partner in
the firm's Chicago office.
38 PLANSPONSOR.COM February - March 2021 Art by Joseph Ciardiello
http://www.PLANSPONSOR.COM
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