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How Long Do You Need to Keep Your Plan Documents?

One of the questions we frequently receive from clients is how long they have to maintain plan records. Sadly, you may not like the answer.
 
Recently, the IRS issued a reminder on this very topic. They have indicated that plan sponsors of SEPs, SIMPLE IRAs, 401(k)s, profit sharing plans and defined benefit plans, as well as ESOPs and money purchase and target benefit plans must retain a variety of plan documentation until the plan has paid ALL benefits AND the statute of limitations for IRS audit has expired, which is generally 3 years. So, essentially, plan sponsors must keep all documents for the duration of the plan and then for the following three years.
 
The following documents must be retained:

  • SEP Plans – Form 5305-SEP or 5305A-SEP should be retained as your plan document.
  • SIMPLE IRA Plans – Form 5304-SIMPLE or 5305-SIMPLE should be retained as your plan document.  
  • Profit Sharing, 401(k), Defined Benefit and Other Types of Plan – The plan document, adoption agreement (if applicable) and all plan amendments should be retained as your plan document.

Additionally, sponsors must also retain all trust records and participant statements. Actuarial statements and calculations, where applicable, should also be retained. Sufficient records need to be maintained to prove that participants received the correct benefit under the terms of their retirement plan.
 
With the movement toward paperless technology, retaining these documents in perpetuity should not be as difficult as it was back when we kept the plan data in large three-ring binders. Nonetheless, sponsors should take care to protect the vehicles that house the electronic plan data to ensure that it is available upon request from the IRS or Department of Labor.

Peter Alwardt is a Tax Partner specializing in employee benefits, tax and ERISA issues for domestic and international clients. He is a member of the American Institute of Certified Public Accountants and NY State Society of CPAs.

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