Maintaining accurate and complete records for ERISA-covered benefit plans is not just good business practice; it’s a critical responsibility for plan sponsors. Missing documentation can create significant liabilities. For example, if a former employee, or even their heirs, files a claim for benefits they believe are owed, the burden of proof falls on the plan sponsor to show the benefit was already paid. Without documentation, the employer may have no choice but to pay again.
Key Record Retention Rules for ERISA Plans
Plan sponsors are subject to several overlapping guidelines when it comes to maintaining plan documentation:
- ERISA Section 107 mandates that plans retain records in a readily accessible format for six years from the filing date.
- The IRS requires most ERISA plans to retain records for three years following the Form 5500 filing date.
- ERISA Section 209, a commonly overlooked provision, requires that records be maintained until all plan benefits have been paid and any applicable audit windows have closed. This means records may need to be kept for decades. Ultimately, it’s the plan sponsor’s responsibility to prove that all owed benefits were properly distributed.
The Role of Form 8955-SSA
Form 8955-SSA is used to notify the Social Security Administration when a participant leaves employment without taking their vested retirement benefits. Years — sometimes decades — later, the SSA may alert the former employee that they could be entitled to benefits. If the employee then files a claim, the employer must provide documentation showing the benefit has already been distributed. Without this proof, the sponsor may have to pay again.
With a significant number of baby boomers approaching retirement, the volume of these claims is expected to rise. This makes having a reliable record retention policy even more essential.
Who Is Responsible for ERISA Plan Records?
Whether a third-party administrator (TPA) holds the records or the employer retains them internally, the plan sponsor is ultimately responsible for their preservation. That includes:
- Distribution records
- Plan documents and amendments
- Participant benefit statements
- Election forms and beneficiary designations
Common business developments — including mergers, acquisitions, and system upgrades — can easily compromise the integrity of these records if retention policies aren’t specifically tailored to benefit plans.
Events That Threaten Record Retention
- Standard Record Retention Policies
Many companies apply general retention policies across all documentation, which may lead to premature destruction of vital plan documents. It’s essential to revise retention policies to ensure benefit-related documents are maintained for the long term. - M&A and Business Closures
During transactions, benefit plan details may fall through the cracks. Even if the plan is carried over, the records may be lost — and this does not absolve the plan sponsor of responsibility. - TPA Contract Changes
When switching TPAs or if a provider goes out of business, plan documents may be discarded unless contracts specifically address record retention. Again, it’s the plan sponsor who bears the risk. - Data Migrations and IT System Changes
Transitions between systems or providers can lead to data loss. Whether the result of a policy error or a technical mishap, the employer remains liable if they can’t prove a benefit was paid.
Best Practices for Plan Sponsors
To mitigate risk, Davidson, Holland, Whitesell & Co. recommends the following recordkeeping practices:
- Retain executed (signed and dated) versions of all documents, including those with electronic signatures.
- If records are stored electronically, have a written retention statement documenting this policy.
- Include record retention requirements in all TPA and payroll provider contracts.
- Maintain access to all plan records during provider changes — even records that may not be typically shared.
- Store and back up records securely, with access known to all relevant fiduciaries.
- Use updated systems to ensure long-term record readability and security.
- File updates to Form 8955-SSA when benefits are distributed.
A proactive, well-maintained record retention policy helps prevent overpayments and ensures that plan participants receive only the benefits they’re owed.
Make Record Retention Part of Your Ongoing Plan Oversight
Have you conducted a recent review of your ERISA plan’s recordkeeping policies? Davidson, Holland, Whitesell & Co.’s Employee Benefit Plan Audit team can help assess your current practices, identify gaps, and recommend strategies to strengthen your documentation protocols.
Contact us today to safeguard your plan’s integrity — and your peace of mind.