Employers often ask me what they should do with all the retirement plan paper they have accumulated over the years. Both the Internal Revenue Service and the Department of Labor have issued detailed guidelines regarding the retention of electronic records and storage requirements.
In Revenue Procedure 98-25, the IRS stated that records needed to demonstrate compliance with tax laws must be available for IRS review at all times, and must be retained as long as they are "material" for administering the Internal Revenue Code. Taxpayers (in this case, plan sponsors) must ensure the ability to retrieve, manipulate, print and produce output of electronic media.
ERISA generally requires that the plan sponsor retain the records and information relied upon in completing annual Form 5500 reports and filing other items with the DOL for a period of least six years after the date on which the annual report or other item is submitted.
Even though the Form 5500 must be filed electronically, the records related to it must be kept in reasonable order, in a safe and accessible place, and in a manner readily permitting inspection. A copy of the Form 5500, with schedules and attachments, must be kept on file, along with required signatures. The DOL's rules also state that paper copies of records that cannot be clearly, accurately or completely converted to an electronic recordkeeping system must be retained. Consult your plan's legal counsel for guidance specifically related to your plan.
Plan sponsor's to-dos for 3rd quarter:
* Conduct a review of Q2 payroll and plan deposit dates to ensure compliance with DOL rules regarding deposit of participant contributions and loan repayments.
* Verify that employees who became eligible for the plan between April 1 and June 30 received and returned an enrollment form. Follow up on forms not returned.
* Ensure that the plan's Form 5500 is submitted by July 31, unless an extension of time to file applies. (Calendar year plans)
* Begin preparing for the distribution of the plan's Summary Annual Report to participants and beneficiaries by September 30, unless a Form 5500 extension of time to file applies. (Calendar year plans)
* Submit employee census and payroll data to the plan's recordkeeper for mid-year compliance testing if you are preforming it. (Calendar year plans)
* Confirm that participants who terminated employment between January 1 and June 30 elected a distribution option for their plan account balance and returned their election form. Contact those who did not.
* Send a reminder memo or email to all employees to encourage them to review and update, if necessary, their beneficiary designations for all benefit plans.
* Begin preparing the applicable safe harbor notices to employees, and plan for distribution of the notices between October 2 and December 2. (Calendar year plans)
* Distribute the plan's Summary Annual Report by September 30 to participants and beneficiaries, unless an extension of time to file Form 5500 applies. (Calendar year plans)
Consult your plan's financial, legal, or tax adviser regarding all items that may apply to your plan.
Securities and advisory services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC.
Ludwig, ChFC, AIF, CRPS, is a financial adviser with LHDretirement. Reach him at email@example.com.
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