Understanding 401(k) Plan Record Retention Requirements for Auditors
Oftentimes, auditors ask for support for years much earlier than the year under audit, such as I-9s, distribution paperwork, or rollovers. It’s incredibly frustrating to receive management advisory comments for not having adequate support to complete current-year testing when the documentation is old but still relevant to the audit. To help reduce management advisory comments let’s go through the guidelines on retention requirements.
Section 107 of ERISA requires certain plan records used to support filings to be retained for at least six years from the filing date. This includes:
- Copies of the Form 5500 and accompanying required schedules and attachments
- Nondiscrimination and coverage test results
- Required employee communications
- Evidence of the plan’s fidelity bond
- Corporate income tax returns used to reconcile deductions
Section 209 of ERISA is where retention requirements are not nearly as straightforward. Section 209 states that an employer must “maintain benefit records, in accordance with such regulations as required by the DOL, with respect to each of [its] employees sufficient to determine the benefits due or which may become due to such employees.” In summary, this means these documents should be retained as long as a possibility exists that they might be relevant to a determination of the benefit entitlements of a participant or beneficiary. Documentation that falls under Section 209 includes:
- Plan documents, adoption agreements, amendments, Summary Plan Descriptions, and IRS determination letters
- Census data and support for such information, including records that are used to determine eligibility, vesting, and calculated benefits (such as rates of pay, hours worked, deferral elections)
- Governance documents such as committee minutes and resolutions related to the plan
Should you have any questions about your retention policy, please work with your Hawkins Ash audit contact.
