Terminated Clients and Records

[Susan S.]

If we send a letter to our terminated clients asking if they want their records and advising them if they don't that the records will be shredded, are we off the hook? These are 401(k) plans, so the records consist of annual report, Form 5500, testing, etc., or in other words things that may be needed for an audit.

My boss likes to get rid of everything but I feel that it is still our firm's responsibility to keep the records for 6 years, regardless if the plan is terminated or active and switched to another TPA firm.

How does everyone handle this? We are a small firm and electronic storage (high speed scanning) of records is not an option at this time.

[Lou S.]

Scannig is cheap and easy. That's what we do.

[ESOP Guy]

Every firm I have every worked for kept the records for at least 6 years. My understanding was it was more defensive then anything else. We wanted to be able to document what we did or didn't do in case questions came up. To me saying all the records is gone is going to be a poor defense if a DOL or IRS audit blows up for the years your firm worked on the plan. Although most of the people I worked with would have said they thought there was a professional duty to keep some reocrds also.

I would add after a few months after the work moved to the new TPA we never were shy about charging full time and expenses to go dig out a record. So if a former client needed a copy of some old report they paid the cost of getting it pulled from storage and the time it took to have some one copy and mail it. It depended on the client but there were even some we got the money up front from them.

[BG5150]

Does your service agreement say anything about records retention?

[chuTzPA]

Are there any standards in the tpa industry for record retention of client records? Is it different for db vs dc plans? Is there an ERISA requirement? where does the 6 yrs come from?