IRS Weighs In on What Records to Keep

An updated page on the IRS website shares what records retirement plan sponsors should keep and for how long.

The Internal Revenue Service (IRS) notes that retirement plan sponsors are required by law to keep books and records available for review by the agency.

On an updated web page, “Maintaining Your Retirement Plan Records,” the IRS says saving these records will also facilitate answering questions when determining participants’ benefits.

Plan sponsors should keep the plan and trust document, recent amendments, determination and approval letters, related annuity contracts and collective bargaining agreements.

The records kept are based on the type of plan sponsored. For example:

  • SEP Plans should keep Form 5305-SEP or 5305A-SEP as the plan document;
  • SIMPLE IRA plans should keep Form 5304-SIMPLE or 5305-SIMPLE as the plan document; and
  • Profit sharing, 401(k) or defined benefit plans should keep the plan document, adoption agreement (if there is one) and all plan amendments.

The IRS also says plan sponsors must keep trust records such as investment statements, balance sheets, and income statements, as well as participant records such as census data, account balances, contributions and earnings, loan documents and information, compensation data and participant statements and notices.

Retirement plan records must be retained until the trust or IRA has paid all benefits and enough time has passed that the plan will not be audited. However, the IRS notes that retirement plans are designed to be long-term programs for participants to accumulate and receive benefits at retirement. The Internal Revenue Code and Income Tax Regulations as well as the Employee Retirement Income Security Act (ERISA) require plan sponsors to keep records of these transactions because they may become material in administering pension law.

Some law firms have reported they are seeing a growing number of claims for pension benefits that were paid or rolled over decades ago by former employees who either do not recall receiving or rolling over their benefits or who are questioning the amount of benefits they received.