October 3, 2022

Document Retention Policy for Your 401(k) Plan

Is There a Checklist of Items Needed for a 401(k) Plan? 

As the Plan Sponsor of a 401(k) Plan one of your responsibilities is to ensure that all transactions for the Plan are completed accurately, timely and completely.  Also, that transactions with risk involved are properly reviewed and approved/authorized.  Since the Plan are regulated plans and must be able to show compliance in various areas, we strongly recommend that implement a Document Retention Plan that covers all important areas related to the Plan.  This Plan should be reviewed regularly and updated as needed.  Also, regular staff training is needed to ensure everyone knows the records that should be kept.  Lastly, saving documents does you no good if you later can’t find where you stored them.  Preparing an Index or Document Listing including where each item is to be maintained is essential to success in being able to support plan activity in the case of a dispute.  The Plan should also include parameters for retention such as how will the documents be maintained (hardcopy or electronic), who can have access to them for security reasons and how long should each document be retained.   The Plan should also reference the individual or group responsible for maintaining and updating the documents and the procedure to use to destroy the documents once the retention period has ended. 

It is important to think outside the box when developing this Plan.   Many of the important tasks related to the 401(k) Plan are performed in human resources and in payroll.  Approvals over salary increases may be maintained in different locations for different sets of employees.  Also, Board Meeting minutes or other higher level strategic reviews for the Plan may be maintained by the Legal Department or Company Secretary function.  Sometimes they are even maintained by outside service providers.  Financial records such as reconciliations of deferrals may be maintained as part of a larger financial reconciliation file.  We urge Plan Sponsors to think through all the processes involved in Plan administration and maintenance as you put together your Retention Plan. 

To help get you started, we have put together the following list of items that we believe are important for most Plans and should be addressed in your Plan.     

  • Plan Documents including the Adoption Agreement, Summary Plan Description, Full Plan Document and IRS Opinion or Determination Letter 
  • Administrative Agreements associated with the Plan, the Trust Agreement, Annuity Contract or other associated documents 
  • Year-end financial reports for the Plan and other full year reports that show Plan activity along with any reconciliations you may have prepared reviewing the reporting 
  • Year-end Payroll File, Year-end W-2 File and other associated reports that accompany your full year payroll information 
  • Human Resource files including I-9 Forms, employee benefit enrollment forms. Offer letters, Personnel Change Forms 
  • Transaction request forms and approval forms related to activity in the 401(k) Plan such as participant loan request forms, Promissory Notes, amortization schedules, participant distribution forms, and hardship withdrawal supporting documentation  
  • Bank statements detailing contributions to the Plan 
  • Approval over Company match or other Company contributions to the Plan 
  • Investment Committee or 401(k) Plan Committee Minutes 
  • Board Minutes or other higher level strategic decision documents regarding the Plan 
  • Approval documents and signature pages (if separate) for all items requiring authorization. 
  • Fee Disclosure and other disclosure materials and evidence showing dissemination of the required disclosures 
  • Copies of the Fidelity Bond, Plan Census, Discrimination Testing, Form 5500 copies and other compliance materials. 

The above listing is not meant to be all inclusive but should give you an idea of the types of information that may be requested during an audit or review of your Plan by the Plan auditor or regulatory authority.  You can review information on the Summit CPA Group website for details regarding the information we request as part of a 401(k) Audit.  The Department of Labor and Internal Revenue Service websites also list suggested materials to retain and the suggested retention periods for the information.  Remember that audits are conducted after a Plan year has been completed and regulatory audits can be conducted up to three years after the current year so documentation must be retained beyond the current Plan year. 

For more information on how we can help, request a free consultation below or contact the team at (314)-886-7913 to discuss your unique 401(k) audit needs.

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