Employee Benefit Records Retention

[Francis]

Does anyone know the time period employee benefit records should be retained? We have health insurance, life, disability, and 401k records going back many years. It would be great to destroy the old records and free up space. Thank you very much.

[rcline46]

Retirement benefit records are kept forever.

[Guest Sieve]

rcline -- What about ERISA Section 107? Isn't 6 years long enough to retain (at least for ERISA purposes)?

frank -- Another alternative is to scan all documents and then destroy the originals (pursuant to the reg under 107).

[rcline46]

Scanning the records is retention. YOu must keep records to prove benefits forever. There are other threads on this - use the search function. Plan documents and information are necessary.

We are working on a DB takeover, PBGC plan. When the plan is terminated, the PBGC will audit (they always do) and they want proof of how the accrued benefit was calculated. The plan has been frozen for 8 years. If there are no records after 7 years, how can we prove the calculation?

How will you prove that someone was paid if you have no records? Keep the records.

[K2retire]

There was another recent post about how to prove someone was not owed any money on a plan that had terminated years earlier, but the former employee received a notice from the Social Security Administration that they had a benefit in the plan. Apparently an SSA had been filed, but never shown as distributed. The employer had disposed of the records after 6 years....

[GMK]

As noted above, keep the records.

I know of a case where a C corp with an ESOP (since about 1986) got all the stock into the ESOP and converted to an S corp. They had to go back and determine the basis for each participant's stock allocation account. This included allocations of forfeited basis from partially vested participants who left years ago. Apparently, it was no fun, but they had the records and could do it.

Being able to confirm past payouts to participants is the biggest advantage to having the old records.

[Guest jstnmarsh]

It is always advisable to keep the records for future reference as you may not know when the need would arise. This could act in your favor when the need arises. There are some cases in the past too where destroying the files lead them to deep trouble, it would require some space and to maintain it would be a tedious job, but this is will be of the utmost importance when the need arises.

[Peter Gulia]

frank1971, although there are some things that truly are permanent or indefinite records, I don't generalize that into an undifferentiated "keep everything". By focusing on the particular laws and business needs involved, it is possible to design a records-retention and records-destruction plan that keeps what you need but gets rid of what you don't really need. If you'd like to learn more, please feel free to call me.