Irs Record Retention Guidelines For Individuals – As a plan administrator, you must meet the Employee Retirement Income Security Act of 1974 (ERISA) filing requirements to ensure your plans are compliant. Understanding these requirements will help you report to regulators and avoid costly lawsuits.
Find out what you need to know about ERISA recordkeeping requirements and how proper benefit plan administration can help you maintain ERISA compliance.
Irs Record Retention Guidelines For Individuals
The following are common questions about ERISA recordkeeping and compliance. This information can help you identify and understand Department of Labor (DOL) ERISA filing requirements, as outlined in the Employee Retirement Income Security Act of 1974.
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Ultimately, the plan administrator is responsible for meeting all ERISA recordkeeping requirements. Many plan administrators outsource responsibilities to third-party administrators to ease the stress of day-to-day operations. However, the scheme administrator will be legally responsible for all actions relating to the scheme.
The DOL requires records for all benefits assigned by participants, such as payroll data and wages, so you as the plan administrator must ensure compliance. You can hire an employee benefits services company to help you maintain compliance and advise you on how to prevent issues such as plan fiduciaries.
Section 107 of ERISA states that administrators must retain plan records for at least six years after filing ERISA returns or reports. ERISA also requires plan administrators to keep these documents in an easily accessible format. All documents supporting disclosures about your employee benefit plan and annual reporting should also be preserved.
Plan administrators must maintain a number of plan-related records to meet ERISA requirements. You can keep these records in paper or electronic format as long as you can access them when you need them. The following is a non-exhaustive list of records to maintain under ERISA:
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Most professional employee benefits consultants recommend keeping records for no more than six years, whether electronic or paper. Depending on their needs, the DOL or IRS may request records from any period, so creating an easily accessible document trail is a best practice to provide accurate records.
Working with a company that offers employee benefits services can ensure that you understand what records to keep and how to implement the system.
Provides employee benefit plans to meet all aspects of ERISA requirements. Our EBS professionals provide comprehensive consultation on qualified planning matters, including a comprehensive compliance review of existing plans.
Technical storage or access is necessary for the legitimate purpose of enabling the use of a particular service expressly requested by the customer or user, or for the sole purpose of transmitting communications over an electronic communications network.
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Necessary for the legitimate purpose of storing technical storage or access settings that have not been requested by the customer or user.
Technical storage or access is used exclusively for statistical purposes. Technical storage or access used exclusively for anonymous statistical purposes. Absent a subpoena, voluntary compliance by your ISP, or additional records by a third party, information stored or retrieved solely for this purpose generally cannot be used to identify you.
Technical storage or access is necessary to create user profiles for sending advertising, or to track users across a website or multiple websites for similar marketing purposes. It is important to know what records to keep. None of us want to drown in piles of unnecessary paper, but we certainly don’t want to throw away important things. Additionally, any document containing an account number or other important information is a risk of identity theft. Safely store what you need and safely cut the rest. But how do you decide which records to keep? As with anything in financial planning, it depends. We’ve created a simple infographic to help.
Electronic Record Keeping – The Internal Revenue Service allows you to keep your statements in an electronic format. An electronic record storage system must be capable of indexing, preserving, retrieving and reproducing exact copies. IRS retention guidelines for electronic records are the same as for paper records.
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Save until warranty or return period expires – Sales receipts used for tax purposes should be saved for at least three years.
1 year – for payslips and quarterly investment statements – these should be preserved compared to annual documents such as W-2s and annual reports. Other records must be kept for one year if not used for tax purposes.
3 years – Income tax returns must be kept for three years in case of an IRS audit. If you leave 25% of your gross income, this goes on for six years. There is no limitation period if no declaration is submitted.
Save forever – For these records, you should keep them in a very safe place like a safe. Your to-do list as a business owner seems to be getting longer every day. There’s one more thing you need to check – and it’s part of federal law. You must keep payroll records, sometimes for up to four years.
What Should I Keep And For How Long?
Don’t worry This is not an impossible task. This article covers the agencies that require payroll records and how long they must keep payroll records.
Payroll is a broad term that includes any document you use to track employees’ hours, wages, and any other information related to how they are paid.
There are other payroll records you should keep, such as travel vouchers or employee benefits receipts.
To be clear, payroll records can include employment taxes and records that show how you determined an employee’s wages.
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Three federal agencies require you to keep employment wage records. There’s just one problem – different agencies have different records they want you to keep and different time periods for you to keep them.
The IRS requires you to keep payroll records, such as pay amounts and dates, dates of employment, and tax deposit dates and amounts.
The Fair Labor Standards Act (FLSA) requires that you continue to identify information about each employee as well as information about their hours and pay grade (eg, employee gender and occupation, total hours worked each workweek, and regular hourly rates).
Keep registers of salaries, collective agreements and sales and purchase registers for at least three years. Keep records used to calculate wages for two years.
How Long To Keep Payroll Records
The Equal Employment Opportunity Commission (EEOC) requires you to keep detailed employment records (eg, employee applications and any records related to promotions, demotions, or terminations). If necessary, these records can prove or disprove that the employee was discriminated against when fired.
Keep records related to employment (hiring, promotion, promotion or termination) for one year after the record is created. If someone files a charge of discrimination under Title VII, ADA, or GINA, keep all records related to the charge until a final determination of the charge is made.
Some states may require you to stay on the payroll a little longer. For example, California and Arizona require four years, while Montana requires you for five years.
To make things a little more complicated, states may have different requirements for the types of records you must keep. Check with your state for details.
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How you store your salary information is up to you. If you prefer, you can use hard copies in locked filing cabinets. But storing payroll records online can help prevent them from being lost or damaged.
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Get started with free payroll setup and enjoy free expert support. Try our payroll software for a free, no-obligation 30-day trial. Collecting records and documents can be a dilemma for individuals and businesses, as it can be difficult to determine how long to keep them before discarding them. However, keeping records for too long can lead to cluttered spaces and excessive storage costs, while getting rid of them too soon can put you at legal and financial risk. Therefore, it is important to understand the guidelines for archiving documents and how long you should keep certain important documents to avoid these problems. As an industry leader in records storage, we understand that compliance with business record retention guidelines goes beyond document storage. You must store them properly. While record keeping may not be complicated for small businesses, you still need a plan.
This guide will introduce you to the Record Retention Guidelines and provides a downloadable PDF of the 2023 Record Retention Guidelines to serve as your compliance checklist.
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Federal Document Retention Guidelines: Key Agencies Several laws, agencies, and statutes define federal guidelines for digital and paper retention. In general, the rule under the Federal Data and Document Retention Guidelines for Businesses is that all documents must be stored (this year):
Working with an accountant, lawyer or data storage consultant should be a standard part of your workflow before shredding paper or destroying hard drives. The cost of non-compliance can be high, with financial penalties running into the millions. So, at the federal level, what areas do you need to focus on?
Your state and local governments may also have stricter record retention guidelines for individuals and businesses than their federal counterparts. In this case, the long term is always
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