Record retention is an important but frequently confusing task. What is required? What is a best practice? While the answer to these questions vary based on the specific type of document, one vital document to keep is the plan document. And what you need to keep and for how long might surprise you.
What are “Plan Documents”?
First of all, a “plan document” in this context means the documents that govern the plan.
- For pre-approved retirement plans (plans that were submitted to and approved by the IRS by a vendor, and then adopted by the plan sponsor), this usually means:
- an adoption agreement that is completed with information and elections by the plan sponsor and then executed by the plan sponsor
- a base plan document, that is a large (generally 80-120 pages), boilerplate document that is not signed but applies to all plans that adopt the associated adoption agreement. While it is not signed, it has key plan provisions. Because the base plan document is not signed or customized for the plan sponsor (like an adoption agreement is), it is often overlooked by the plan sponsor (and sometimes even the vendor). But it is not signed because the provisions in it are so important that they are universally required.
- For individually-designed retirement plans, and some pre-approved plans, the plan document is a single, lengthy document which contains both the standard provisions and the custom elections by the plan sponsor.
- For health & welfare plans, plan documents include any wrap documents and the associated policies and evidence of coverage, and a written plan document in the case of a self-insured plan.
- For all plans, any amendments to the main plan are part of the “plan documents” that govern the plan.
Note that summary plan descriptions are not plan documents, although there are reasons to retain them, and they do not govern the plan.
Which Plan Documents Should Be Kept?
The short answer is all of them, from the beginning of the plan. So, for example, if a retirement plan was adopted originally in 2008, the plan would have the original plan documents at least three plan restatements, and several required interim amendments, not to mention discretionary amendment that may have been adopted.
In addition, it is critical that the versions of the plan documents that are retained are signed and dated. This evidences that the documents were actually adopted and that the adoption was within the required time frames.
How Long Should Plan Documents Be Retained?
The best practice is to retain plan documents for the life of the plan plus 6 years. This is because if the plan is audited, plan compliance back to the beginning of the plan may need to be demonstrated. In addition, the provisions of the plan in effect at any one time may need to be referenced in determining claims for benefits, on in a litigation defense situation. The 6 year period is recommended to ensure that there has been time to pay out all benefits under the plan, and the possibility of an audit has passed.
Can The Plan Documents Be Retained in Electronic Form?
Definitely, yes. Plan documents, especially for older plans, can result in so much paper in hard copy form. Retaining the documents in electronic form saves physical space and generally makes it easier to find the documents you are looking for. The DOL has certain standards for electronic document retention, generally dealing with the ability to retrieve and protect the documents, but they follow common sense and are in keeping with today’s technology.
What Should a Plan Sponsor Do To Be in Plan Document Retention Compliance?
Plan sponsors should review their files to make sure that they, not their recordkeeper, have signed copies of all plan documents in their files. If there are missing documents, then working with their vendors and recordkeepers to obtain copies for their files is the next step. Be aware that it can be difficult to get historical plan documents from vendors who no longer work with the plan. If all else fails, there are ways to replace missing documents through retroactive adoption, which may require a submission to the IRS for approval of the retroactive adoption. Consult with a benefits attorney to assist with plan compliance assessments and corrections.