Retirement Plan Record Retention Review

Treasury regulations under Code Section 6001 provide that any person subject to federal income tax or any person required to file a return of information with respect to income must keep records sufficient to establish the amount of gross income, deductions, credits, or other matters required to be shown by such person in any return of such tax or information.1 The regulations go on to require that the records be kept at all times available for inspection by authorized internal revenue officers or employees and must be retained so long as their contents may become material in the administration of any internal revenue law.2 These rules apply to retirement plans qualified under Code Sections 401(a), 403(b), and 457, as well as individual retirement arrangements (IRAs), simplified employee pensions (SEPs), savings incentive match plans for employees (SIMPLE IRAs), and, presumably, nonqualified retirement plans.3 In an Internal Revenue Service (IRS) video on plan recordkeeping, it is suggested that a retirement plan sponsor should retain plan records until all benefits have been paid, the trust has been dissolved, and the plan is no longer subject to audit.4 Although the IRS may not be able to impose penalties beyond a plan's open tax years under Code Section 6501, which are generally those tax years for which three years have not elapsed since the applicable tax return was filed, the IRS may require plan records for earlier years, even back to the plan's inception, in considering whether the plan is qualified or not under the applicable sections of the Code.5 ERISA RECORD RETENTION REQUIREMENTS Two sections of ERISA directly address plan record retention.If the employer cannot meet this burden, then the issue becomes whether the evidence presented by the plaintiffs is sufficient to show what benefits are due as a matter of just and reasonable inference.11 Record Retention for Benefit Claims under ERISA Section 502(a)(1)(B) ERISA Section 502(a)(1)(B) permits a plan participant or beneficiary to bring a civil action to recover benefits due under the terms of the plan, enforce rights under the terms of the plan, or clarify rights to future benefits under the terms of the plan.12 Although the statute and corresponding regulations do not expressly provide for record retention, they also do not expressly limit the period during which a participant or beneficiary may bring such an action.13 This suggests that ERISA Section 209 would apply in setting a record retent