Record Retention for Terminated Clients

[seatpa]

How long do you retain plan records for terminated clients?  We have no contractual obligation to our clients to retain any records, but we do feel it is prudent to keep the records for a period of time.  If there's an audit, we want to be able to defend anything we've done.

 

I am so sick of the boxes of paper from these former clients and I want to get rid of as much of it as possible.

 

So, how long are you keeping these records?

[MoJo]

First, I would advise that you change your service agreement to provide that you WILL destroy records in your possession after X years, and if the client/ex-client wants anything, you will provide it to them prior to X years (for a fee).

Second, for your own protection, I would recommend keeping everything forever. One never knows when a client or a participant or someone is going to file suit, and put you in the hot seat for something.  Relying on a "statute of limitations" defense is a last resort.  Relying on proof you did nothing wrong is much better.

Finally, ERISA requires the PLAN to maintain records for so long as necessary to calculate the benefits due (regardless of how long that is).  Fiduciaries should keep everything forever - but that doesn't help you..  Who owns the records?  Is it "plan records" or your records or what?  You need to answer that before you can make a decision about what and when to purge.

After all of that, the best guess is that the stature of limitations runs out six years AFTER the termination of the relationship.  I'd put a buffer in that of a few more years, at least (one never really knows when the relations completely ceases to exist - e.g. providing data to the new provider to do the next 5500 may be after the "normal" end of the relationship - but may still be considered part of the relationship)).

[david rigby]

Agree, forever is a good recommendation.  However, that does not imply paper is the only viable storage medium.

 

[MoJo]

1 hour ago, david rigby said:

Agree, forever is a good recommendation.  However, that does not imply paper is the only viable storage medium.

 

A scanner and an intern can do wonders for paper reduction.

[CuseFan]

Forever is the plan sponsor's responsibility, not a former service provider, but agree that forever shouldn't cause you any problems. Also recommend investing in a good copier/scanner and keep paperless records - for both current and former clients - and get rid of the paper and the boxes.

[Retirement ForUsAll]

Even though you're a service provider and not a plan sponsor, I'd imagine forever is a good policy just in case. However, that's probably not viable without some form of electronic storage, which we talk about in our guide on the ERISA Record Retention Requirements.