Part 1 – Eligible Compensation

Part 2 – De Minimis Balances of Terminated Employees

Part 3: Maintaining Documentation

Common Finding

There are several documents that Plan Sponsors must retain. Examples include, but are not limited to, enrollment forms, declination forms, change in election forms, management’s approval of pay rates, new hire and birth date documentation such as I-9’s, termination paperwork, and support for hardship distributions. Plan Sponsors must maintain this documentation until the participant no longer has funds in the Plan. This means the Plan Sponsor must maintain the documentation for terminated employees who still have balances within the retirement plan.

If a plan does not offer the ability to update their deferral percentages online, paper forms should be maintained for all employees for any elections or changes they make. Declination forms should be obtained for all eligible participants, even if they elected not to contribute to the Plan. This declination form helps prove that all participants have been properly offered enrollment into the Plan.


Management should obtain and maintain documentation in personnel files as a record of any changes and support retirement plan transactions and processes. Documentation is vital to ensuring the Plan is operating in accordance with participant elections and that Plan documents are in compliance.

Make sure you are following up with employees that have not returned the Plan’s enrollment form. Just because they did not return the form does not necessarily constitute a declination. If participants are allowed to make changes online, it is good practice to keep loan and election change correspondence received from the Third-Party Administrator in the employees’ personnel files.