Record Retention

[Pension RC]

I just had a client ask me how long she is required to retain records (employment and other). Her auditor is telling her that she has to keep record forever. We generally keep paper copies for 7 year, and I just learned that we keep everything electronically - forever. Is there any formal guidance on this?

 

Thanks for any responses!

[Bird]

I think the best answer is "as long as it takes to be able to prove that someone is getting or got the right benefit."  IOW forever. 

[CuseFan]

Exactly. Recent court cases have sided with former employees claiming benefits where the plan sponsor - even a successor plan sponsor - did not retain records that could refute the claim. 

At a minimum, sponsors and providers should be diligent about reporting SSA deletions when someone is paid out and retain all bank records pertaining to distributions. People get letters from SSA when they retire, telling them they may have a benefit from XYZ plan, so they go asking for it forgetting that they took a lump sum payout 20 years before. If the plan sponsor doesn't have proof of the pay out and the claimant doesn't just take their word for it, you could be faced with legal action.

[Peter Gulia]

ERISA § 209 might, at least for some employee-benefit plans and in some factual circumstances, require an employer to keep work and wage records for several decades.

 

For just one example, consider this case:  The litigants and the trial and appeals courts had four different interpretations about when a worker’s service began.  Resolving the case required a court in 2008 to consider records of a worker’s employment in 1971 and birth in 1942.  Pell v. E.I. DuPont de Nemours & Co., 539 F.3d 292, 44 Empl. Benefits Cas. (BNA) 1944, 2008 U.S. App. LEXIS 16854 (3d Cir. Aug. 8, 2008) (precedential), reversing in part, Pell v. E.I. DuPont de Nemours & Co., No. 2002-00021, 39 Empl. Benefits Cas. (BNA) 1270, 2006 WL 2864604 (D. Del. Oct. 6, 2006).

 

A claimant’s production of evidence that raises a genuine question about an employer’s failure to maintain sufficient records shifts to the employer the burdens of proof and persuasion.  E.g. Mason Tenders District Council Welfare Fund v. M.A. Angeliades, Inc., 43 Empl. Benefits Cas. (BNA) 1193, 2007 WL 4208587 (S.D.N.Y. 2007).

 

A duty to make and keep records includes a duty to use at least reasonable care to detect false, suspicious, or unreliable records.  E.g. Trustees of Chicago Painters and Decorators Pension, Health and Welfare, and Deferred Savings Plan Trust Funds v. Royal International Drywall and Decorating, Inc., 493 F.3d 782, 41 Empl. Benefits Cas. (BNA) 1026 (7th Cir. 2007).

 

[rhb401]

SIX YEAR RETENTION  (SEVEN Years to be safe) - ERISA Section 107,(29 U.S.C. 1027)
Section 107 provides that any Fund required to file a Form 5500 must retain those records necessary to verify, explain, clarify or back-up the entries on the Form 5500 for a period of six (6) years from the filing date of the report. In the case of the Metro Funds, the filing date is usually extended until October 15th.
Section 107-type Records
The records required to be maintained for six (6) years under section 107 are not specifically described in DOL regulations or guidance but, based on prior Interpretive Bulletins, it would encompass all records that support entries on the Form 5500, including, but not limited to:
-bank records (statements, cancelled checks etc.)
-ledgers/journals and other accounting records
-receipts
-claims records and files
-employer remittance reports
-contracts and agreements
-third party certifications (e.g. insurance company Schedule A information)
-financial statements
-invoices
-insurance policies
-reimbursed expense reports
2
-service provider agreements
-correspondence relating to all of the above
II. INDEFINITE RETENTION: ERISA Section 209, (29 U.S.C. 1059)
Section 209 requires every employer and, implicitly, every fund to maintain all records necessary to determine the benefits due or that may become due employees/participants/beneficiaries for “as long as a possibility exists that they might be relevant to a determination of the benefit
entitlements of a participant or beneficiary.” . In effect, such records must be retained “indefinitely”.Most of the guidance in this area dates back to ERISA’s predecessor, the Welfare and Pension Plan Disclosure Act.
Section 209-type Records
Again, while there is no specific guidance other than that noted above, Section 209 and best practices would require the indefinite retention of various records including, but not limited to:
-Agreement and Declaration of Trust, with all amendments and restatements.
-Summary Plan Descriptions
-Plan and Restated Plan documents
-IRS Determination Letters
-minutes of all meetings of the Board of Trustees.
-employer remittance reports
-Investment Policy Statements
-investment manager contracts
-collective bargaining agreements
-participant work records

[Bird]

Retaining records "necessary to verify, explain, clarify or back-up the entries on the Form 5500" is not the same "being able to prove someone got a (or the correct) benefit."  That's a red herring as far as I'm concerned, and a dangerous one if it leads you to believe that purging (all) records is ever a safe approach.

[rhb401]

That's why ERISA Sec. 209 (Indefinite Retention) was also cited.

[Bird]

OK thanks/sorry, my attention span is limited.

[rhb401]

A fate we all suffer