When it comes to plan-related document storage remember that your primary goal should be to preserve materials in a format allowing for quick and easy retrieval. It’s appropriate to store plan records electronically whenever possible. Also, be sure to retain an executed copy (or countersigned copy, as applicable) of each record and not the unsigned original that may have been sent to you for signature. While most providers can provide reports and current plan documents, the plan administrator remains ultimately responsible for retaining adequate records that support the plan document reports and filings.
responsible for retaining adequate records that support the plan document reports and filings.
|Documentation||Retention Requirement for Audit Purposes*|
|Plan Documents (including Basic Plan Document, Adoption Agreement, Amendments, Summary Plan Descriptions, and Summary of Material Modifications)||At least six years following plan termination
|Annual Filings (including 5500, Summary Annual Reports, plan audits, distribution records and supporting materials for contributions and testing)||At least six years
|Participant Records (including enrollment, beneficiary, and distribution forms; QDROs)||At least six years after the participant’s termination|
|Loan Records||At least six years after the loan is paid off|
|Retirement / Investment Committee meeting materials and notes||At least six years following plan termination|
*For litigation purposes, we recommend that documents be retained indefinitely.
Forfeiture dollars are to be allocated annually in accordance with your plan document’s direction. Typically forfeitures can be used to pay allowable and reasonable plan expenses and/or to offset employer contributions. If dollars remain they should be allocated back to participants in the year for which they are accrued (again, as directed in the plan document).
The issue with not allocating forfeitures for the year they are accrued (or shortly thereafter), is that they are considered to be the property of the participants existing in the year(s) of accrual. The remedy for carrying multi-year forfeitures is voluntary compliance with the IRS. An attorney should be able to help with the application and direction. Aside from any fees/penalties the IRS may levy, plus the cost of the Voluntary Correction Program (VCP), there will be the issue of identifying and finding participants in each year affected, so forfeitures can be properly distributed to those that are entitled to them.
The accounts of lost participants may be forfeited after a reasonable effort is made to locate the participant. This must be authorized by the plan document. Such amounts may be added to the plan’s forfeiture account and used in the same manner as other forfeitures. However, if the participant reappears the account must be restored.
What constitutes as a reasonable effort to find missing participants depends on the facts and circumstances. Recent DOL guidance on tracking down participants where a plan is terminated indicates the following:
- Notify participant by certified or electronic email (DOL has a model notice);
- Review plan records;
- Contact designated beneficiary;
- Use free online search tools; and
- Size of account may be considered in deciding how much effort is required.
Note that IRS and SSA letter forwarding programs are no longer available.
This article was derived from “Retirement Times”. The “Retirement Times” is published monthly by Retirement Plan Advisory Group’s marketing team. This material is intended for informational purposes only and should not be construed as legal advice and is not intended to replace the advice of a qualified attorney, tax adviser, investment professional or insurance agent. (c) 2015. Retirement Plan Advisory Group. ACR#157926 10/15. ACR#161752 11/15.